PART 1. CAPITAL BUDGETING. The table shows the incremental cash flow projections for an investment in...

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PART 1. CAPITAL BUDGETING. The table shows the incremental cash flow projections for an investment in new equipment that has an initial cost of $4,725 (in millions). Calculate the net present value of the project, using a discount rate of 5%. Assume no depreciation and no salvage value. In millions Year 1 Year 2 Year 3 Year 4 Year 5 Operating revenue 2,685 3,785 3,867 3,995 4,989 Operating cost 1,845 1,745 1,745 1,720 2,642 Taxes (at 21%) 1. NPV: (32 points) 2. Would you recommend investing in this project? Why or why not? (3 points) PART 1. CAPITAL BUDGETING. The table shows the incremental cash flow projections for an investment in new equipment that has an initial cost of $4,725 (in millions). Calculate the net present value of the project, using a discount rate of 5%. Assume no depreciation and no salvage value. In millions Year 1 Year 2 Year 3 Year 4 Year 5 Operating revenue 2,685 3,785 3,867 3,995 4,989 Operating cost 1,845 1,745 1,745 1,720 2,642 Taxes (at 21%) 1. NPV: (32 points) 2. Would you recommend investing in this project? Why or why not? (3 points)

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The Net Present value is the difference between the Present ... View the full answer