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A new plant, which requires a total capital investment of R 20 million (working capital of...

A new plant, which requires a total capital investment of R 20 million (working capital of R2 million) for a capacity of 2 500 tons per year is being planned. The selling price I R 8000 per ton. The variable operating cost is expected to be R 3 000 per ton. The monthly fixed operating cost will be R 500 000 (excluding depreciation) The plant is operated at 90% of the capacity. If the declining balance depreciation method is used and the salvage value of the plant after 5 years is taken as R 2 million, what will be the expected profit or loss ( before tax) during the third year be?

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