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Question 3 Not yet answered Marked out of 7.00 Flag question Consider the following financial information about a retooling project at a computer manufacturing
Question 3 Not yet answered Marked out of 7.00 Flag question Consider the following financial information about a retooling project at a computer manufacturing company: The project costs $2150000 and has a five-year service life. The retooling project has a CCA rate of 30%. At the end of the fifth year, any assets held for the project will be sold. The expected salvage value will be about 10% of the initial project cost. The firm will finance 40% of the project money from an outside financial institution at an interest rate of 9%. The firm is required to repay the loan with five equal annual payments. The firm's incremental (marginal) tax rate on the investment is 40%. The firm's MARR is 18%. With the preceding financial information, (a) Determine the after-tax cash flows. Year 0 1 2 3 4 5 Cash flow (b) Compute the annual equivalent worth for this project. AE=
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