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Dear Sir , how does the 125,696 be calculated? the question are shown as follows:
A company is considering investing in a two-year project. Machine set-up costs will be $125,000, payable immediately. Working capital of $4,000 is required at the beginning of the contract and will be released at the end.
Given a cost of capital of 10%, what is the minimum acceptable contract price to be received at the end of the contract?
The answer is: $152,174
many thanks
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