Bacon Signs plans a major retooling of their manufacturing plant.The equipment has an initial capital cost of $5,000,000 but would increase operating cash flow by $1,500,000 each year for five years.The equipment could be sold for a net cash flow of $1,000,000 in five years.If the hurdle rate is 14%,and the permanent increase in working capital is $500,000,should the firm purchase the equipment?

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The Answer of Bacon Signs plans a major retooling of their manufacturing plant.The equipment has an initial capital cost of $5,000,000 but would increase operating cash flow by $1,500,000 each year for five years.The equipment could be sold for a net cash flow of $1,000,000 in five years.If the hurdle rate is 14%,and the permanent increase in working capital is $500,000,should the firm purchase the equipment?

Bacon Signs Plans a Major Retooling of Their Manufacturing Plant