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Question 2 Required: a) Determine the relevant after-tax cash flow...

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Accounting

Question 2
Required:
a) Determine the relevant after-tax cash flow for the purchase of the CIM equipment at each of the following three points:
i. Project initiation
ii. Project Operations
iii. Project Disposal
b) Calculate the net present value of the CIM proposal. Should Tomas Shoes proceed with the investment?
c) Calculate the payback period (after tax) for the CIM proposal.
(1 mark)
d) Discuss the potential difficulties of Tomas Shoes using discounted cash flow analysis to decide about the CIM manufacturing equipment. What other factors should Thomas Shoes take into consideration in making a decision?
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