An investment has the following cash flows. Should the project be accepted if it has been assigned
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Question:
An investment has the following cash flows. Should the project be accepted if it has been assigned a required return of 14 %? Why or why not?
Year Cash Flow
0 -$30,000
1 8,400
2 13,900
3 18,600
Katie's Cafe is considering the addition of a new refrigeration system that will cut annual food costs by $15,001. The system will cost $36,000 to purchase and install. This system is expected to have a 3-year life and will be depreciated to zero using straight-line depreciation. What is the annual net income for this project if the tax rate is 34%?
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