Homework Answers
Depreciation = 500000/5 = $100000
Annual cash inflows net of tax = (10000*40-200000)-(400000-200000-100000)*35%
= $165000
Net present value = Present value of cash inflows PVIAF (20%, 5) - Investment
= 165000*2.991 - 500000
= $-6485
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