An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The
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Question:
An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $ today and is expected to last for years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $ each year for consecutive years and project outflows will also begin in one year and are expected to be $ each year for consecutive years. The corporate tax rate is and the required rate of return is Calculate the project's net present value.
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