PGH Inc Is Considering a New Seven-Year Expansion Project with an an Initial

question 54

Multiple Choice

PGH Inc. is considering a new seven-year expansion project with an initial fixed asset investment of $3.87 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,103,000 in annual sales, with costs of $1,065,000. The tax rate is 21 percent and the required return is 14.6 percent. What is the net present value of this project?

• A) $32,155.56
• B) $71,841.16
• C) $134,098.28
• D) −$52,171.66
• E) $95,008.04

---

Definitions:

Sebum

Sebum is an oily substance produced and secreted by sebaceous glands in the skin, helping to keep it moisturized and protected.

Bacterial Growth

The process by which bacteria increase in number, size, or both, often following a characteristic growth curve.

Spongy Bone

Consists of a network of thin strands of bone; provides mechanical strength.

Compact Bone

Dense, hard bone tissue found mainly near the surfaces of a bone.