A Proposed Ten-Year Project Has the First Year Sales Revenue

question 112

Multiple Choice

A proposed ten-year project has the first year sales revenue and cost projected at $300,000 and $100,000,respectively.Sales revenue is expected to grow at 3 percent per year,while the costs will grow at 5 percent per year.The firm's marginal tax rate is 35 percent and required return is 9 percent.What is the present value of the after-tax operating cash flows generated by the project?

• A) $898,126
• B) $914,932
• C) $1,625,000
• D) $1,641,250

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