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You are contemplating the purchase of a new $1,840,000 computer-based dairy cow feeding system. The system will be depreciated straight line over its ten year life and have no value at the end of its life. You will earn $530,000 per year from additional milk production. IF the tax rate is 25% and the required return to capital is 1%, compute the following--on an after-tax basis--for this project:

a} Payback

b} Net Present Value.

Please show all work and relevant formulas used in calculations.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91596632

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