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Suppose Blue Hamster Manufacturing Inc, is evaluation a proposed capital budgeting project (project alpha) that will require an initial investment of $400,000. The project is
Suppose Blue Hamster Manufacturing Inc, is evaluation a proposed capital budgeting project (project alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows: year 1 375,000 year 2 425,000 year 3 450,000 year 4 450,000 Blue Hamster Manufacturing Incs weighted average cost of the capital is 9%, and project alpha has the same risk as the firms average project. Based on the cash flows, what is project Alphas net present value (NPV)?
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