Magellen Industries Is Analyzing a New Project

Multiple Choice

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the net present value under the best-case scenario?

A) -$11,664
B) -$7,946
C) $7,946
D) $11,665
E) $37,946