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You are evaluating a capital project with a Net Investment of $800,000, which includes an increase in net working capital of

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Answer #1
Annual Revnues 120000
Less: Annual cost 14000
Less: Depreciation 35000
Before Tax Income 71000
Less: Tax @ 40% 28400
After tax Income 42600
Add: Depreciation 35000
Annual cashflows 77600
Annuity PVF at 12% for 20 years 7.46944
Present value of inflows 579628.5
Present value of salvage 10366.7
Present value of Release of WC 829.336
Total Inflows 590824.6
Less: Present value of Investment (800000+8000) 808000
NPV -217175
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