The Zone Company is evaluating a capital expenditure proposal that requires an initial investment of $3,450,000. The
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Question:
The Zone Company is evaluating a capital expenditure proposal that requires an initial investment of $3,450,000. The machine will improve productivity and thereby increases net after-tax cash inflows by $805,000 per year for 7 years. It will have no salvage value. The company requires a minimum rate of return of 10 percent on this type of capital investment.
Required:
Determine the net present value (NPV) of the investment proposal.
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