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Question 15 A firm is considering an investment in capital equipment. The equipment requires an initial cash outflow of $1,000,000, out of which $700,000 s

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Question 15 A firm is considering an investment in capital equipment. The equipment requires an initial cash outflow of $1,000,000, out of which $700,000 s financed with debt at a 4% cost of debt (kg) amortized as a regular annuity over 3 years, and $300,000 is financed with equity at a cost of equity of 12% (ko) The tax rate (1) is 30%. Given the 3-year life of the equipment, the depreciation schedule is as follows: Year 1, 5333,000; Year 2,5445,000 Year 3. $148.000, and Year 4.574,000 Some basic cash income and cash expense data for this equipment is shown below. Operating Cush incomot (Ol) is $800,000 per year, years 1 to 3. Operating Cash Expenso (OE) is $300,000 per year, years 1 to 3 This investments Equity method cash outflow for year is a $1.000.000 100.000 OG 100.000 need to know depreciation amount in year o

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