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Sleep Comfort Corp. is considering a new product: the Ejector Bed. The Ejector Bed allows either person (left or right) to eject the other person

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Sleep Comfort Corp. is considering a new product: the Ejector Bed. The Ejector Bed allows either person (left or right) to eject the other person off of the bed at the touch of a button. The production equipment and facilities will cost $500 million. The production equipment is 10-year property with depreciation rates of 10% and 18% in the first two years. The project will last two years by which time the equipment and facilities will be sold for $150 million, Earnings before interest, taxes and depreciation is forecast to be $400 million in both years. The project will require an increase in net working capital of $25 million, which will be liquidated at the end of year two. The company's cost of capital is 9% and the marginal tax rate is 35%. Answer the following questions What are the initial cash flows? (Answer in millions of dollars and round to the nearest million.) SIM What are the operating cash flows in Year 1 (including the depreciation tax shield)? (Answer in millions of dollars and round to the nearest million) SM What are the ferminal cash flows (including the depreciation tax shield and tax on sale)? (Answer in millions of dollars and round to the nearest million) What is the NPV of the project? (Answer in millions of dollars and round to the nearest million.) M

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