What is the annual net cash flow per year

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A firm is evaluating a new capital project. The firm spent $45,000 on a market study and $30,000 on consulting three months ago. If the firm approves the project, it will spend $900,000 on new machinery, $80,000 on installation, and $10,000 on shipping. The machine will be depreciated via simplified straight-line depreciation over its 18-year life. The expected sales increase from this new project is $800,000 a year, and the expected incremental expenses are $300,000 a year. In order to start this new project, the company will invest $100,000 in working capital. The marginal tax rate is 34%. What is the annual net cash flow per year from this project?

Reference no: EM132558435

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