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RET Inc. has decided to manufacture and sell a new line of high-priced commercial stoves. Projected sales for the new line of stoves in annual

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RET Inc. has decided to manufacture and sell a new line of high-priced commercial stoves. Projected sales for the new line of stoves in annual units for the next 10 years are 5,000 a year. The sales price is $1,200 per stove, the variable costs are $840 per stove, and fixed costs are $1,000,000 annually. The plant and equipment required for producing the new line of stoves costs $2,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $400,000 at the end of 10 years. Net working capital increases by $500,000 at the beginning of the project (year 0) and it is reduced back to its original level in the final year. The tax rate is 25 percent and the discounting rate for the project is 10%. 1. What is the incremental cash flow for this project in year 0? 2. What is the annual Net Income (NI) for this project in year 3? (do not enter $ sign) 3. What is the annual operating cash flow (OCF) for this project in year 3? (do not enter $ sign) A 4. What is the book value for the plant at equipment at the end of year 10? (do not enter $ sign) A) 5. What is the after-tax cash flow of the plant and equipment at disposal (salvage)? (do not enter $ sign) A 6. What is the incremental cash flow for this project at the end of year 10? (do not enter $ sign) A) 7. What is the Net Present Value (NPV) for this project? ** Please round to nearest thousand in order to accommodate for rounding errors. Example: if you obtain $1,245,678 then enter 1,246 (do not enter $ sign) A) 8. The project should be rejected or accepted? In your response only type either accepted or rejected

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