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QUESTION 9 A company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 25 percent. Assume

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QUESTION 9 A company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 25 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Suppose the appropriate discount rate is 10 percent. Determine the net working capital spending for Year 4 then calculate the NPV of the project. What is the project NPV? Year 0 Year 1 Year 2 Year 3 Year 4 Investment $155,000 Sales revenue $91,000 $93,300 $96,000 $99,100 Operating cost 20,000 20,600 21,600 23,000 Depreciation 38,750 38,750 38,750 38,750 Net working capital 17,000 15,000 13,000 11,000 spending O $44,908.14 O $52,610.37 $64,527.45 O $38,689.63 O $29,773.52 QUESTION 10 A project will produce an operating cash flow of $301,000 a year for four years. The initial cash outlay for equipment will be $860,000. The net aftertax salvage value of $28,500 will be received at the end of the project. The project requires $84,000 of net working capital up front that will be fully recovered. What is the net present value of the project if the required rate of return is 10 percent? O $71,753.15 O $75,556.99 O $79,360.83 $83,164.67 $86,968.51

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