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Polymer Mechanics, Inc. is considering a new plastics process. The 30new process will entail an investment...

Polymer Mechanics, Inc. is considering a new plastics process. The 30new process will entail an investment of $100,000 in machinery, which is expected to last 5 years and will have a salvage value of $10,000. The new process will save $35,000 in wages each year and increase revenues by $15,000 per year. Furthermore, the process will require

an increase in working capital (at t = 0) of $5,000. If the firm’s tax rate is 34% and the opportunity cost of capital is 15%, should Polymer invest in the project? (Assume straight line depreciation to a book value of zero at the end of the project.)

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DATE: 1 Page 1 Calculation of depreciation Statement for de preciation - Cost of Asset - Salvage Value (fozdepreciation) - LiHEMU DATE: Vage 2 Calculation of Present Value of inflows at the end of Year 5 from Sale of Asset Bale Value W Book Value [boPLEASE DON’T FORGET TO GIVE A THUMBS UP ??!!!

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