New Mold Plastics is considering an investment in new manufacturing equipment. The equipment costs $1.6 million and will provide annual cash inflows of $418,000 at the end of each of the next 6 years. The firm’s debt-equity ratio is .55 based on market values. The cost of equity is 15.10 percent and the aftertax cost of debt is 4.39 percent and the tax rate is 34 percent. The project is equally as risky as the firm’s current operations. What is the NPV of the proposed investment?
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