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The staff of Porter Manufacturing has estimated the following net after-tax cash flows and probabilities for a new manufacturing process: Net After-Tax Cash Flows Year

The staff of Porter Manufacturing has estimated the following net after-tax cash flows and probabilities for a new manufacturing process:

Net After-Tax Cash Flows

Year

P = 0.2

P = 0.6

P = 0.2

0

$100,000

$100,000

$100,000

1

20,000

30,000

40,000

2

20,000

30,000

40,000

3

20,000

30,000

40,000

4

20,000

30,000

40,000

5

20,000

30,000

40,000

5*

0

20,000

30,000

Line 0 gives the cost of the process, Lines 1 through 5 give operating cash flows, and Line 5* contains the estimated salvage values. Porters cost of capital for an average-risk project is 13%. Find the projects expected NPV.

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