Amazing Manufacturing, Inc., has been considering the purchase
of a new manufacturing facility for $490,000. The...
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Amazing Manufacturing, Inc., has been considering the purchaseof a new manufacturing facility for $490,000. The facility is to befully depreciated on a straight-line basis over seven years. It isexpected to have no resale value at that time. Operating revenuesfrom the facility are expected to be $385,000, in nominal terms, atthe end of the first year. The revenues are expected to increase atthe inflation rate of 5 percent. Production costs at the end of thefirst year will be $230,000, in nominal terms, and they areexpected to increase at 6 percent per year. The real discount rateis 8 percent. The corporate tax rate is 25 percent.
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Calculate the NPV of the project. (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
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