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University Of California, Los Angeles Operations And Supply Chain Management Assignment Help - NPV


Question - Garden-Grow Products is considering a new investment whose data are shown below. The
equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a
zero salvage value, and would require some additional working capital that would be recovered at the
end of the project's life. Revenues and other operating costs are expected to be constant over the
project's life. W hat is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3.)

WACC 10.0%
Net investment in fixed assets (basis) $75,000
Required new working capital $15,000
Straight-line deprec. rate 33.333%
Sales revenues, each year $75,000
Operating costs (excl. deprec.), each year $25,000
Tax rate 35.0%


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