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Consider a firm that is investing Eur 24,000,000 in a new project to buy fixed assets

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Consider a firm that is investing Eur 24,000,000 in a new project to buy fixed assets. The tax authority allows you to depreciate the assets according to the following schedule: Year 2 3 4 5 Percentage of 20% 30% 30% 10% 10% initial investment The project has a 4 year life and its asset can be sold for an expected before-tax salvage value of Eur 3,500,000 at the end of the project's life. The expected sales are reported below Year Sales (Eur) 2 12,000,000 3 14,000,000 4 10,500,000 9,000,000 The cost of goods sold is 35% of the revenues from sales. At the end of the first three years the inventory is 5% of the sales, account payables are 10% of the cost of goods sold and the account receivables are 7% of the sales. At the end of the fourth year the net working capital will drop to 0. The corporate tax rate is 34%. a) What are the cash flows associated with the net working capital for every year? [6 Points) b) What are the yearly cash flows produced by the project? [12 Points] c) If the opportunity cost of capital for the depreciation tax shield (tax saved thanks to the depreciation) is 4.50% while the opportunity cost of capital for the remaining cash flow is 8.50%, what is the NPV of the project? [10 Points]