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A project has a 7 year life and costs $400,000. Depreciation is straight line to zero over the life of the

project and there is no salvage value. The tax rate is 30% and a 12% return on this project. Sales are expected to be 75,000 units per year.

If the fixed cost per unit is $600,000 per year, the variable cost is $40 per unit and the revenue for each unit is $50:

a)   What is the base-case cash flow

b)   What is the NPV

Hint: Question 5 is related to information provided in Chapter 11.


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NPV is the present... View the full answer


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