What is the net present value of project

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Question: Germaine Metals is considering installing a new molding machine which is expected to produce operating cash flows of $58,500 per year for 7 years. At the beginning of the project, inventory will increase by $18,300, accounts receivables will increase by $18,400, and accounts payable will increase by $16,100. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $266,200. The equipment will be depreciated straight-line to a zero book value over the life of the project.

The equipment will be salvaged at the end of the project creating an aftertax cash flow of $45,400. What is the net present value of this project given a required return of 11.2 percent?

Reference no: EM133291086

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