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Yeni Sabah Inc. is considering an investment of $730,000 in an asset with economic life of five years. The firm estimates that the nominal annual

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Yeni Sabah Inc. is considering an investment of $730,000 in an asset with economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $490,000 and $100,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 4%. SABAH will use the straight- line method to depreciate its assets to zero over five years. The salvage value of the asset is estimated to be $66,000 in nominal terms at that time. The one-time net working capital investment of $22,000 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 24% tax rate. Calculate the project's total nominal cash flow from assets for each year and determine the NPV of the investment by using a cost of capital of 12%. What is your decision, should the firm accept the investment

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