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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 $120,000

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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 $120,000 of this amount $70,000 is subject to five-year 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 $50,000 The depreciated assets will have zero resale value Use Toble 12.12. Use Aprendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods The contract will require an additional investment of $55,000 in working capital at the beginning of the first year and of this amount, $25,000 will be returned to the Spartan Technology Company after six years. The investment will produce $50,000 in income before depreciation and toxes for each of the six years. The corporation is in a 25 percent tax bracket and has a 10 percent cost of capital Calculate the net present value (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value b. Should the investment be undertaken? Yes O No

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