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Business, 07.08.2021 05:00 jakhunter354

Your boss asked you to evaluate a project with an infinite life. Sales and costs project to $1,000 and $500 per year, respectively. (Assume sales and costs occur at the end of the year, i. e., profit of $500 at the end of year one.) There is no depreciation and the tax rate is 30%. The real required rate of return is 10%. The inflation rate is 4% and is expected to be 4% forever. Sales and costs will increase at the rate of inflation. If the project costs $3,000, what is the NPV? a) $500.00
b) $1629.62
c) $365.38
d) $472.22

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