"The following information pertains to a proposed new five-year venture for a firm:,,,,Pre-startup cost of new equipment (assume 5-year SL) $200,000,,Investment in market research undertaken last year $100,000,,Incremental sales revenue (years 1 – 5) $750,000,,Foregone sales revenue of current products (years 1 – 5) $ 50,000,,Cost of Goods Sold (years 1 – 5) $450,000,,Incremental cash expenses (years 1 – 5) $150,000,,Corporate tax rate 34%,,Corporate cost of capital 12%,,Permanent working capital required at outset,to be restored to cash at the end of,,the project’s life $ 50,000,,a. Develop the incremental cash flows for the project?,b. what is the projects NPV?,,*You helped me with this problem, but I forgot to add in the corporate cost of capital. I am not sure where that fits in or if it matters.,,Thanks
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