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Your firm, Market World, is considering a marketing campaign that would have a net cost of $50,000 for an electronic billboard. The marketing campaign would

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Your firm, Market World, is considering a marketing campaign that would have a net cost of $50,000 for an electronic billboard. The marketing campaign would increase pre-tax operating cash flows before taking account of depreciation by $23,000 per year. The cost of the billboard would be depreciated over the next 4 years using the MACRS method, depreciation would be 33%, 45%, 15%, and 7%. The marketing managers have a debate on how long the billboard will be effective. The market researchers believe the billboard will be effective for 7 years. The new digital marketing director believes the billboard is outdated and will be ineffective after 2 years and can be sold for $2,000. Given this discussion, the CFO asks you to prepare a scenario analysis to determine the importance of the billboard's life on the NPV. Each scenario is equally likely. Tax rate is 40 percent and WACC is 10 percent

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