A Project Requires an Initial Investment of $10,000, Straight-Line Depreciable

Multiple Choice

A project requires an initial investment of $10,000, straight-line depreciable to zero over four years. The discount rate is 10%. Your tax bracket is 34% and you receive a tax credit for negative earnings in the year in which the loss occurs. Additional information for variables with forecast error are shown below. Suppose you are interested in the project's sensitivity to unit price. What is the NPV at a price of $13 per unit?

A) -$10,967
B) -$1,029
C) $105
D) $1,868
E) $2,056