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Veridian Dynamics is considering the purchase of a new cloning machine, which will cost $80 million plus an additional $8 million to ship and install.

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Veridian Dynamics is considering the purchase of a new cloning machine, which will cost $80 million plus an additional $8 million to ship and install. The new machine will replace the existing machine, which has zero book value and could be sold today for $24 million. The new machine has a useful life of 4 years, and will be depreciated to zero using the straight line method. The new machine will require $8 million worth of spare parts to be purchased initially and held in inventory for the next 4 years to make sure the machine operates smoothly. These spare parts will be sold at the end of 4 years and the entire $8 million will be recaptured. The new machine will increase sales by $180 million per year, increase cost of goods sold by 580 million per year, and decrease operating expenses by $22 million pear year over the next 4 years. Veridian Dynamics expects to sell the new machine for $8 million at the end of 4 years. Veridian Dynamics's income tax rate is 25% and its cost of capital is 15%. What is the Net Present Value of this project? (in 9 millions) O $206.9 O $6.3 0-578 $198.9

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