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ABC Co

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ABC Co. wants to invest $11.3 million up-front in a project that will generate cash flows of $3.4 million per year for 5 years starting in a year. In year 6 the company will incur a shut-down cost of $1.6 million. If the cost of capital is 13.60%, what is the NPV of the project?

a)

$4,100,000

b)

-$1,114,427

c)

$4,955,525

d)

-$258,902

e)

$1,230,047