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What are the project cash flows

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Reference no: EM132281258

The Brassy Fin Pet Shop is considering an expansion. Construction will cost $90,000 and will be depreciated to zero, using straight-line depreciation, over five years. Earnings before depreciation are expected to be $20,000 in each of the next five years. The firm's tax rate is 34 percent.

  1. What are the project's cash flows?
  2. Should the project be undertaken if the firm's cost of capital is 11 percent?

Reference no: EM132281258

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