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Ralph's Bow Works ( RBW ) is planning to add a new line of bow ties that will require the acquisition of a new knitting
Ralph's Bow Works RBW is planning to add a new line of bow ties that will require the acquisition of a new knitting and tying machine. The machine will cost $ million. It is classified as a year MACRS asset and will be depreciated as such. Interest costs associated with financing the equipment purchase are estimated to be $ per year. The expected salvage value of the machine at the end of years is $ The decision to add the new line of bow ties will require additional net working capital of $ immediately, $ at the end of year and $ at the end of year RBW expects to sell $ worth of the bow ties during each of the years of product life. RBW expects the sales of its other ties to decline by $in year as a result of adding this new line of ties. The lost sales level will remain constant at $ over the year life of the proposed project. The cost of producing and selling the ties is estimated to be $ per year. RBW will realize savings of $ each year because of lost sales on its other tie lines. The marginal tax rate is percent. Use Table to answer the questions below. Round your answers to the nearest dollar.
Compute the net investment year
$
Compute the net cash flows for years and for this project.
:$
:$
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