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The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The initial investment in land and equipment will be $
The Spartan Technology Company has a proposed contract with the
Digital Systems Company of Michigan. The initial investment in land
and equipment will be $ Of this amount, $ is subject
to fiveyear MACRS depreciation. The balance is in nondepreciable
property. The contract covers six years; at the end of six years,
the nondepreciable assets will be sold for $ The depreciated
assets will have zero resale value. UseTable
The contract will require an additional investment of $ in
working capital at the beginning of the first year and, of this
amount, $ will be returned to the Spartan Technology Company
after six years.
The investment will produce $ in income before depreciation
and taxes for each of the six years. The corporation is in a
percent tax bracket and has a percent cost of capital.
aCalculate the net present
value.Do not round intermediate calculations and
round your answer to decimal places.
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