Question

Financial Management

Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year.

The necessary equipment can be purchased for $43.5 million. It is believed the value of the equipment in five years will be $6.5 million.

Conch Republic has a 21 percent corporate tax rate and a 12 percent required return. Production of the existing model is expected to be terminated in two years.

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