# Question

Brigid Co. has the following potential project: Machine price = $1,600,000; additional inventory requirement = $50,000. Cash flows will be generated at year end. Rev1 = $250,000 and grows at 5 percent each year for five years, while Cost1 = $100,000 and grows at 4 percent. At the end of the five-year project, the assets can be sold for $20,000, while the additional inventory that was tied up will be released. The applicable CCA rate land purchase and machine is 30 percent. The tax rate = 45%, and RF = 4.5%; project beta = 1.5; ERM = 9.5%. The ending UCC = $124,500.

Calculate the NPV of the project if the asset class remains open upon termination of the project. Decide whether or not Brigid Co. should accept the project.

Calculate the NPV of the project if the asset class remains open upon termination of the project. Decide whether or not Brigid Co. should accept the project.

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