Make nethome requires an upfront investment

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The product has a 4-year life. New equipment necessary to make NetHome requires an upfront investment of $7.5 million. This will be depreciated straight-line over its useful life of five years. At the end of the 4 year project, this equipment can be sold for $1 million. The marginal corporate tax rate is 40%. When calculate FCF, at the end of year four, the change for this new equipment is (1000000+500000*0.4)?

Reference no: EM132383001

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