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You are considering opening a gas station at a nice neighborhood. Suppose the following assumptions are true: 1. Inital investment cost = $625,000 2. Initial

You are considering opening a gas station at a nice neighborhood. Suppose the following assumptions are true:

1. Inital investment cost = $625,000

2. Initial increase in net working capital = $20,000

3. Annual sales starting from year 1 = $175,000

4. Annual maintenance expense starting from year 1 = $45,000

5. Straight line depriciation to zero with a useful life of 25 years

6. Plan to run the gas station for 5 years

7. 70% of net working capital retrieved at end of year 5

8. Can sell the gas station for $380,000 after 5 years

9. Tax rate =21%

10. Cost of Capital = 15%

WHAT WILL BE YOUR FREE CASH FLOW IN YEAR 5?

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