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Lincoln Inc. is considering a new project which requires aninitial investment of $6 million today. The investment involves thepurchase of a machine with a CCA rate of 30%. Revenues lessexpenses for this project are expected to be $2 million per yearfor 4 years. The project requires an immediate $200,000 increase innet working capital and the working capital will grow at 3% eachyear in the following years. Lincoln Inc. expects to sell themachine at the end of its 4-year operating life for $100,000.The effective corporate tax rate is 35%. And Lincoln uses a 10%cost of capital to evaluate projects of this nature.Calculate theNPV for this investment.Should Lincoln implement this project?
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