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The information you hand to Mary shows the following: Initial investment outlay of $30 million, consisting...

The information you hand to Mary shows the following:


Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year


Project and equipment life: 5 years


Sales: $25 million per year for five years


Assume gross margin of 60% (exclusive of depreciation)


Depreciation: Straight-line for tax purposes


Selling, general, and administrative expenses: 10% of sales


Tax rate: 35%


You continue your conversation.


“It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.”

“No problem,” you say.


Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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