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You are evaluating a capital project with a net investment of $95,000, which includes an increase...

You are evaluating a capital project with a net investment of $95,000, which includes an increase in net working capital of $5,000. The project has a life of nine years and an expected salvage value of $3,000. The project will be depreciated via simplified straight-line depreciation. Revenues are expected to increase by $20,000 per year and operating expenses by $4,000 per year. The firm’s marginal tax rate is 40%, and the cost of capital for this project is 8%. What is the net present value of this project?

  • -$1,641
  • -$7,474
  • -$5,252
  • -$6,040
  • -$6,641
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