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Question 2 (10 points). Kate wants to launch a pizzeria. Initially, she needs to invest $100,000 in manufacturing equipment and $30,000 in net working capital.

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Question 2 (10 points). Kate wants to launch a pizzeria. Initially, she needs to invest $100,000 in manufacturing equipment and $30,000 in net working capital. The project can last for 5 years. At the end of the project, Kate can recover 100% of the initial investment in net working capital. Kate uses the straight-line depreciation method for the manufacturing equipment and assume that the terminal value of the manufacturing equipment is 0 . When the project goes into operation, she can sell 40,000 pizzas per year at a price of $6.5 per pizza. It costs about $4.0 to make a pizza. Fixed operating costs such as rent on the production facility are $15,000 per year. Taxes are 40% and the required return is 15%. Calculate NPV, IRR, payback, discounted payback, and the profitability index of this project

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