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The director of RMC Inc plans to launch a new product. investment The initial cost of equipment and other facilities is $ 6 0 0

The director of RMC Inc plans to launch a new product. investment
The initial cost of equipment and other facilities is $600,000. This makes a
general management has been considering launching this new product for some time. They
made several trips to different cities to estimate future demand
of the new product. These trips cost the company approximately $100,000
so far. The lifespan of the project is estimated at 5 years. Turnover
of year 1 should be 1000,000, and the turnover should remain the same
throughout the duration of the project. The operating costs of the project are estimated at
$600,000 per year. If the project is undertaken, the total investment in the fund
net turnover will initially increase by $100,000, but the company will recover
50% of its investment in net working capital at the end of the fifth
year. The tax rate is 30% and the tax depreciation rate is 20
%. The equipment can be sold at the end of the project for $200,000. Furthermore, a
team of consultants was tasked with carrying out a study on the potential of
demand for the product. The agreement concluded with the consulting company provides that it will not
will receive the consulting fees ($20,000) only when the project is undertaken. THE
appropriate discount rate for the project is 11.7%. Calculate the cost of
the initial investment at time zero and the present value of the tax savings?

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