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Revenues generated by a new fad product are forecast as follows: evenues $40,000 30,000 10,000 5,000 Thereafter Expenses are expected to be 40% of revenues,
Revenues generated by a new fad product are forecast as follows: evenues $40,000 30,000 10,000 5,000 Thereafter Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues rhe r. The product requires an immediate investment of $42,000 in plant and equipment. a. What is the initial investment in the product? Remember working capital Initial investment b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight -Jine depreciation, and the frm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. (Do not round intermediate calculations.) Year Cash Flow
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