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Renovating the Sci Li requires an initial investment of $100,000 of material assets and expects to produce a cash flow before taxes of $75,000 for three years (i.e. cash flows will occur at year 1, year 2, and year 3). The corporate tax rate is 35%. The assets will depreciate using the MACRS 3-year schedule which calls for 33% depreciation in year 1, 45% in year 2, 15% in year 3, and 7% in year 4. The opportunity cost of capital is 10%. Assume the asset sells for book value at the end of the project. Calculate the NPV.
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