What is the initial cash flow for the project

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Problem

Goodweek Tire, Inc., has recently developed a new tire, the SuperTread, and must decide whether to make the investment. The research and development costs so far total $10 million. Market research (costing $5 million) shows that there is significant demand for the new tire. The SuperTread will be produced and sold for the next two years. Goodweek Tire must initially invest $120 million in production equipment. Goodweek expects sales revenues of $90 million each year. Working capital is equal to 15% of sales. Investments in working capital are made at the beginning of each year. At the end of the terminal year, the working capital is liquidated. Get the instant assignment help. What is the initial cash flow for the project?

Reference no: EM133921789

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