Bill Plans to Open a Do-It-Yourself Dog Bathing Center in a Storefront

Multiple Choice

Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica.

Assume the required return is 10%. What is the project's NPV?

A) $14,111
B) $27,322
C) $32,556
D) $34,737
E) $45,001