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XYZ Corporation is evaluating a capital expansion project. The following information is taken from XYZ Corporation company records, as well as other assumptions about the

XYZ Corporation is evaluating a capital expansion project. The following information is taken from XYZ Corporation company records, as well as other assumptions about the company:
Sales are expected to increase by $115,000 in years 1-2, increase by $105,000 in years 3-4, and increase by $100,000 in year 5 and be sustained indefinitely thereafter.
Expenses are expected to increase by $100,000 in years 1-2, increase by $75,000 in years 3-4, and increase by $50,000 in year 5 and be sustained indefinitely thereafter.
Accounts receivables are expected to increase by $15,000 and accounts payable are expected to increase by $10,000, while no changes in cash or inventory are expected.
The expansion projects cost is $60,000 and will be depreciated using straight-line over the 5 years.
XYZ Corporations tax rate is 40% and cost of capital is 8%.

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