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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $921,483. The fixed asset will be depreciated
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $921,483. The fixed asset will be depreciated straight-line to 32,611 over its 3-year tax life, after which time it will have a market value of $129,258. The project requires an initial investment in net working capital of $74,739. The project is estimated to generate $178,106 in annual sales, with costs of $146,682. The tax rate is 0.38 and the required return on the project is 0.14. What is the aftertax salvage value in year 3?
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