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Yezi Inc. is considering a proposal to manufacture high-end cereal bars that provides dietary fiber supplements. The The project requires use of an existing warehouse,

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Yezi Inc. is considering a proposal to manufacture high-end cereal bars that provides dietary fiber supplements. The The project requires use of an existing warehouse, which the firm acquired 3 years ago for $1.5 million and currently rents out for $200,000/year. Rental rates are expected to remain constant for the next 10 years. In addition to using the warehouse, the project requires an upfront investment into machines and other equipment of $1.9 million. This investment can be fully depreciated under the straight-line method over the next 10 years for tax purposes. However, Yezi expects to terminate the project at the end of 8 years and to sell the machines and equipment for $525,000. Finally, the project requires a networking capital equal to 10% of projected sales (i.e. net working capital requirement at t=0 is 10% of sales at t=1). After the project is terminated, the investment in net working capital can be recovered in full. Sales of cereal bars are expected to be $3.4 million in the first year and are projected to stay constant throughout the 8 years life of the project. The first sales revenue will arrive at t=1 and the last at t=8 for the total of 8 years. Cost of goods sold and operating expenses (excluding depreciation) are 82% of sales, and profits are taxed at 30%. The discount rate for projects of this sort is 13% per year, compounded annually. Please provide me the Free Cash Flow for each year of this project (times t=0 through t=8) and compute the project's NPV. Time Free Cash Flow 8 PROJECT NPV: 1 point

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