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You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck. You hire a consultant

You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck. You hire a consultant to make a recommendation. The consultant charges you $1500 and recommends a CP8 truck. The truck's price is $40,000 and it will cost another $10,000 to modify it for special use by your firm. The company expects to sell this new truck in three years for $20,000 (salvage value), Use of the truck will require an increase in the company's net working capital of $2,000. Use of the truck is expected to increase the firm's EBIT by $25,000. The firm's marginal tax rate is 40%. What is: a. the initial outlay required to fund this project? b. the annual after tax cash flows for the new truck project? c. the terminal cash flow for the new truck project

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