A project has an initial requirement of $261,000 for fixed assets and $27,000 fo

Question

A project has an initial requirement of $261,000 for fixed assets and $27,000 for net working capital. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $78,000. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $96,200 and the discount rate is 13 percent. What is the project's net present value if the tax rate is 35 percent?


A: $42,011

B: $43,333

C: $45,799

D: $47,880

E: $47,919

Explanation / Answer

The answer is actually C: $45,799

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