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TFixed assets for the project will have a tax inclusive cost of $97,000. Shipping for the fixed assets will be $1,400. Installation of the new
TFixed assets for the project will have a tax inclusive cost of $97,000. Shipping for the fixed assets will be $1,400. Installation of the new machinery will run $600. The fixed assets associated with this project have a 5-year MACRS class life. It is expected that the fixed assets will be sold at the end of the project for $8,000. Selling and Administrative expense for the project is independent of the level of sales and is estimated at $160,000 for all years of the project. Net Working Capital requirements for the project at the start of the project are $25,000 (time zero) and then will be 7% of dollar sales in each period of the project with the entire final years balance of NWC being recaptured at the very end of the project. If the firm has a WACC of 11% and a tax rate of 21%, should the project be undertaken? Prepare a spreadsheet similar to the Power Mulcher Project example discussed in class and in the textbook. Calculate the YEP projects NPV, IRR, and Payback
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