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Your company has been presented with an opportunity to invest in a project. The facts on the project are as tabulated. Investment required $60,000,000 Salvage
Your company has been presented with an opportunity to invest in a project. The facts on the project are as tabulated. Investment required $60,000,000 Salvage value after 10 years $0 Gross income $20,000,000 Annual operating costs: Labor $2,500,000 Materials, etc. $1,000,000 Fuel and other cost $1,500,000 Maintenance cost $500,000 The project is expected to operate for 10 years. If management expects to make 15% on its investments before taxes, would you recommend this project?
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