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Suppose Brown sugar's firm is considering an investment that would extend the life of one...

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Accounting

Suppose Brown sugar's firm is considering an investment that would extend the life of one of its facilities for 5 years. The project would require upfront costs of $7.68M plus $25.63M investment in equipment. The equipment will be obsolete in (N+2) years and will be depreciated via straight-line over that period (Assume that the equipment can't be sold). During the next 5 years, Brown sugar expects annual sales of 70M per year from this facility. Material costs and operating expenses are expected to total 31M and 9.04M, respectively, per year. Brown Sugar expects no net working capital requirements for the project, and it pays a tax rate of 40%. Brown Sugar has 74% of Equity and the remaining is in Debt. If the Cost of Equity and Debt are 19.12% and 5.60% respectively, Compute NPV (Evaluate the project only for 5 years)

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