The Down Towner Is Considering a Project with a Life

question 23

Multiple Choice

The Down Towner is considering a project with a life of 4 years that will require $164,800 for fixed assets and $42,400 for net working capital.The fixed assets will be depreciated using the Year 2018 bonus depreciation method.At the end of the project,the fixed assets can be sold for $37,500 cash and the net working capital will return to its original level.The project is expected to generate annual sales of $195,000 and costs of $117,500.The tax rate is 24 percent and the required rate of return is 13 percent.What is the project's net present value?

• A)$48,909.09
• B)$46,482.43
• C)$42,316.67
• D)$56,500.00
• E)$59,488.87

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