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= +r) 9) A company is planning to have a new 6-year project. It costs $4.5 million. The fixed asset will be depreciated straight-line
= +r) 9) A company is planning to have a new 6-year project. It costs $4.5 million. The fixed asset will be depreciated straight-line to zero over its six-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,000,000 in annual sales, with costs of $1,000,000. The tax rate is 21 percent and the required return is 6 percent. Please answer the following questions (Q9-Q12) based on this information: Q9: What is the depreciation amount each year? uir A) $1,500,000 B) $750,000 C) $1,000,000 D) $800,000 E) $500,000 C) $52,500 D) $1,500,000 E) $750,000 C) $52,500. D) $4,659,164.80 E)-$147,522.31 10) What is operation cash flow (OCF) each year? A) $947,500 B) $197,500 11) What is the net present value of this project? A) $947,500 B) $159,164.80 12) Should we accept this 6-year project? A) We should accept B) We should reject
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