Question

Asked Oct 21, 2019

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Step 1

Incremental cash flow at the beginning of the project = -( initial investment in the store + initial investment in working capital) = - (30,900,000 + 1,000,000) = - 31,900,000

Step 2

Incremental cash flow in the year 1 to 19: $ 4,173,500

Please see the white board. Please be guided by the second column titled “Linkage” to understand the mathematics. The cells highlighted in yellow contain your answer. Figures in parenthesis, if any, mean negative values. All financials are in $.

Step 3

Incremental cash flows in year 20 = Annual incremental cash flow of year 1 to 19 + r...

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