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Your firm is considering purchasing new equipment that would cost $ 1 0 , 0 0 0 , 0 0 0 ( $ 3 ,

Your firm is considering purchasing new equipment that would cost $10,000,000($3,000,000 expensed immediately, and the rest depreciated straight-line over 4 years to a book value of zero, after which the equipment will be useless and worth nothing). Operating revenues at t =1,2,3, and 4 years would be $16,000,000 each year and operating costs would be $8,000,000 each year. The tax rate is 20% and the cost of capital is 15% per year. What is the NPV?

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