Prasla Auto Detailing is evaluating a project with a life of 6 years that will...
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Prasla Auto Detailing is evaluating a project with a life of 6 years that will produce annual operating cash flows of $134,000. During the life of the project, inventory will be increase by $7,000, accounts receivable will increase by $11,000, and accounts payable will increase by $3,600. The project requires the purchase of equipment at an initial cost of $298,000 that will be depreciated straight-line to a zero book value over the life of the project. Ignore bonus depreciation. The equipment will be salvaged at the end of the project creating an aftertax cash inflow of $37,000. At the end of the project, net working capital will return to its normal level. What is the net present value of this project given a required return of 15.3 percent?
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