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Suppose a rm is considering the following project (all gures in $ thousands): To undertake the project the rm will need to make a one-time

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Suppose a rm is considering the following project (all gures in $ thousands): To undertake the project the rm will need to make a one-time investment of $137,500 in year 0. This specialized equipment can be depreciated using the straight-line method over the seven years, with a salvage value of $5,600 in year 7. Your sales and marketing team tell you that they estimate sales of 7,500 units in year 1, rising by roughly 35% per year through year 5, then declining by 45% each year through year 7. They assume the product is dead at that point, with 0 units demanded/sold in year 8. The ination rate is forecast to be 1.5% in year 1, rising by a constant to 2.8% in year 5, then leveling off. The rm's real cost of capital is forecast to be 9.3% in year 1 and projected to increase by 2.5% each year through year 7. The taX rate is estimated to be a level 39%. Sales revenue per unit is expected to be $15.30 in year 1. Variable cost per unit is estimated at $10.20 in year 1. Cash xed costs will be $17,940 in year 1. All will grow with ination. What is the project NPV under these assumptions

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