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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.


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Expert Solution

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

jeff jeffy answered 1 year ago
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