The Whilst Co

question 191

Multiple Choice

The Whilst Co. is analyzing a project that has projected sales of $189,400 and costs of $102,301. The project requires an investment in inventory of $15,000 plus another $28,000 in accounts receivable. Fixed assets of $80,000 are needed and belong in a 30% CCA class. Accounts payable will increase by $36,001. An interest expense of $11,000 will be incurred annually. The project has a life of 3 years. At the end of the three years, the equipment has an estimated market value of $26,001. The company requires a 14% rate of return and is in the 34% marginal tax bracket. What is the net present value of this project?

• A) $65,887
• B) $68,023
• C) $81,921
• D) $91,425
• E) $93,608

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