Bruno's Lunch Counter Is Expanding and Expects Operating Cash Flows

question 36

Multiple Choice

Bruno's Lunch Counter is expanding and expects operating cash flows of $26,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $3,000 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 16 percent?

• A)$18,477.29
• B)$21,033.33
• C)$28,288.70
• D)$29,416.08
• E)$32,409.57

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