You Have Been Asked to Evaluate a Project with Infinite

Multiple Choice

You have been asked to evaluate a project with infinite life. Sales and costs are projected to be $1000 and $500 respectively. There is no depreciation and the tax rate is 30%. The real required rate of return is 10%. The inflation rate is 4% and is expected to be 4% forever. Sales and costs will increase at the rate of inflation. If the project costs $3000, what is the NPV?

A) $500.00
B) $1629.62
C) $365.38
D) None of the above