Winker LLC is considering installing a new machine which isexpected to produce operating cash flows of $64,000 per year for 8 years. Atthe beginning of the project, inventory will increase by $23,200, accounts receivableswill increase by $24,600, and accounts payable will increase by $17,700. At theend of the project, net working capital will return to the level it was priorto undertaking the new project, except for inventory, which will be writtendown to zero. The initial cost of the machine is $276,000. The equipment willbe depreciated straight-line to a zero book value over the life of the project.The equipment will be salvaged at the end of the project creating an after-taxcash flow of $66,600. What is the net present value of the project given arequired return of 9.9 percent?
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