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D Co. is considering a $100,000 copier which would be depreciated straight-line to zero salvage over 5 years. D Co. thinks the copier can be sold in 5 years for $25,000. The copier will need $16,000 in inventory of which 60% will be on credit. The copier will not produce any additional revenue but is expected to save $20,000 in labor costs over each of the 5 years. The tax rate is 30% and the WACC is 6.35% What is the Initial Investment and the Basis for depreciation?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91779922

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