TexMex Food Company Is Considering a New Salsa Whose Data

question 21

Multiple Choice

TexMex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce their pre-tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

• A) $3,636
• B) $3,828
• C) $4,019
• D) $4,220
• E) $4,431

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