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Your company is considering a machine which will cost $1,000,000 at Time 0 and which can be sold after 5 years for $200,000. $240,000 must

Your company is considering a machine which will cost $1,000,000 at Time 0 and which can be sold after 5 years for $200,000. $240,000 must be invested at Time 0 in inventories and receivables; these funds will be recovered when the operation is closed at the end of Year 5. The facility will produce sales revenues of $1,000,000 per year for 5 years; variable operating costs (excluding depreciation) will be 40 percent of sales. No fixed costs will be incurred. The company will be using a building which is owned by the firm, and provides them with annual rent of $200,000. By an act of Congress, the machine will be depreciated over five years using 5-yaer MACRS (0.20, 0.32, 0.19, 0.12, 0.11, 0.06). The company has a 40 percent tax rate, enough taxable income from other assets to enable it to get a tax refund on this project if the project's income is negative, and a 10 percent cost of capital. Inflation is zero. What is the project's NPV?

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