Question: General Mills is considering a project to launch a new line of cereal. Given the following information, should GM accept the project? Cost of Equipment=

General Mills is considering a project to launch a new line of cereal. Given the following information, should GM accept the project?

Cost of Equipment= $50,000

Tax rate = 40% Investment in NWC = $25000

Required rate of return = 10%

Life of the project = 5 years

Net Income = $5000

Salvage value= $3000

The asset is depreciated to zero using straight line depreciation

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