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The expected cash flow forecasts of an investment are listed on the table below. The investment has a 1 2 % cost of capital and
The expected cash flow forecasts of an investment are listed on the table below.
The investment has a cost of capital and a year holding period. The depreciation will be
calculated using straight line method and ignoring salvage value.
Initial investment $ thousands
Salvage value $ thousands
Initial revenues $ thousands
Variable costs of revenues
Initial fixed costs $ thousands
Inflation rate
Discount rate
Receivables of sales
Inventory of next year's costs
Tax rate
Calculate: a Cash flows from working capital; b Cash flows from operating; c NPV of this
investment; and d NPV of the investment, if the forecasted inflation rate changes from to
and the discount rate changes from to
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