G Mart, Inc., is considering the acquisition of equipment to expand its sales.

G Mart, Inc., is considering the acquisition of equipment to expand its sales. The initial cost of the equipment is $100,000. However, the production manager has estimated the expansion program will increase cash operating costs by $20,000. Assume straight line depreciation to a zero salvage value, a tax rate of 40%, and a cost of capital of 10%. How much will the additional cash revenue during the 10 year life of the asset have to be to cause the IRR of the project to be equal to k?

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