With the economy in full recovery,Treble Piano Manufacturing is considering a plant expansion.Its initial capital cost (not including working capital)is $750,000,expected after-tax operating cash flow is $225,000 per year for five years,and the recovery of capital assets after five years is $75,000.If this project has a required rate of return of 15% and the initial cost of working capital is $100,000,should the firm expand? (Assume that the $100,000 of working capital is recovered in Year 5 at the end of the project life.Compute the NPV to support your decision.)

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The Answer of With the economy in full recovery,Treble Piano Manufacturing is considering a plant expansion.Its initial capital cost (not including working capital)is $750,000,expected after-tax operating cash flow is $225,000 per year for five years,and the recovery of capital assets after five years is $75,000.If this project has a required rate of return of 15% and the initial cost of working capital is $100,000,should the firm expand? (Assume that the $100,000 of working capital is recovered in Year 5 at the end of the project life.Compute the NPV to support your decision.)

With the Economy in Full Recovery,Treble Piano Manufacturing Is Considering