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Question 9 J. Child's Gourmet Pie Shop has the following investment opportunity: Pie machinery at t=0 costs $1,200. The cost of making pies is $450
Question 9 J. Child's Gourmet Pie Shop has the following investment opportunity: Pie machinery at t=0 costs $1,200. The cost of making pies is $450 at t=1, t=2, and t=3. The pie machinery is depreciated straight line depreciation to zero over 3 years. The economic value of the pie machinery after three years is zero Estimated annual sales are $1,120 at t=1, t=2, and t=3. The required return is 11%. The tax rate is 35% Assume no working capital requirements. What is the NPV? [7.5 MARKS
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