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A project requires an initial investment of $300,000 to purchase a processing equipment. This equipment will be depreciated on a straight line schedule over 5 years.
The sales revenue is $400,000 each year for three years and the cost is $200,000 each year for three years. At the end of the third year, the equipment will be sold at its book value.
The working capital required is $100,000 at t=0, $120,000 at t=1, $120,000 at t=2, and 0 at t=3.
The tax rate is 40%, and the cost of capital 15%.
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