46. Net Present Value, Internal Rate of Return, and Payback Period Analyses; Ethical Issues. Clothing Outlet, Inc., would like to open a retail store in Chicago. The initial invest- ment to purchase the building is $420,000, and an additional $50,000 in working capital is required. Since this store will be operating for many years, the working capital will not be returned in the near future. Clothing Outlet expects to remodel the store at the end of 3 years at a cost of $100,000. Annual net cash receipts from daily operations (cash receipts minus cash payments) are expected to be as follows: Year 1 Year 2 Year 3 Year 4 Year 5 $80,000 $115,000 $118,000 $140,000 $155,000 $167,000 $175,000 Year 6 Year 7 The company's required rate of return is 13 percent. Assume management decided to limit the analysis to 7 years. 47. Net Present Value (With Taxes). Refer to the Clothing Outlet, Inc., information presented in the previous exercise. Assume the costs associated with the purchase of the building are depreciated over 20 years using the straight-line method, with no salvage value. Costs asso- ciated with the building remodel are depreciated over 10 years with no salvage value, starting with year 4. The company's tax rate is 40 percent. Again, management will limit the analysis to 7 years. Required: a. Find the net present value of this investment using the format presented in Figure 8.2. Round to the nearest dollar. b. Should Clothing Outlet, Inc., open the new store? Explain. c. How did income taxes affect the decision being made by Clothing Outlet, Inc