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lex Mex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line

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lex Mex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However , this project would compete with other Tex Mex products and would reduce their pre tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) Do not round the intermediate cakulations and round the final answer to the nearest whole number, 10.0% $5,000 WACC Pre-tax cresh flow reduction for other products (cannibalization) Investment cost (depreciable basis) Straight-line depr. rate 580,000 33.33396 Annual sales revenues S66,000 -$25,000 Annunl operating costs (excl. depr.) 35.0% Tax rate

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