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You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate

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You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $390 per unit and sales volume to be 1,000 units in year 1:1250 units in year 2; and 1.325 units in year 3. The project has a 3-year life. Variable costs amount to $220 per unit and fixed costs are 5100000 per year. The project requires an initial investment of $162.000 in assets, which will be depreciated on a line basis with a life of 3 years. The actual market value of these assets at the end of year 3 is expected to be $34,000. NWC requirements at the begining of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 12 percent. (Use SL.d What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Year2 Total cash flow (259,500.00)

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