What is the present value of the operating cash flow

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Your firm is considering a new project. The project would last for 7 years. Your firm would have to purchase a new piece of equipment. The equipment costs $4,745,000. The equipment could be sold at the end of the project for $760,000. The project would generate revenues of $1,930,000 per year and it would have operating costs of $1,185,000 per year. The company would have to invest $362,000 in operating net working capital initially. Operating net working capital would remain at this level throughout the life of the project. The project's required rate of return is 11.4%. The tax rate is 30.5%. The CCA rate is 16%.

Problem 1: What is the present value of the operating cash flow in the list approach?

Reference no: EM132708444

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