Question: Affirm is determining the NPV for a project that will be terminated after five years. They will purchase equipment today that will be fully depreciated

Affirm is determining the NPV for a project that will be terminated after five years. They will purchase equipment today that will be fully depreciated to zero over five years. The firm anticipates that they can sell the used equipment in five years for 20% of the initial investment. There is no opportunity costs or taxes. The level of working capital in each of the years one through four is 15% of sales and sales in your IV will be 3 million. If the total value of the investment account in your five is 1,250,000 what is the cost of the original investment?

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