Multiple Choice
Road Hawk Inc. is adding a new production line that will cost $720,000. The line will be depreciated on a straight-line basis over a 7-year period and will generate net cash flows of $160,000 in each of the 7 years. At the end of the project, it is expected the line can be sold as scrap for $10,000. If the firm's marginal tax rate is 40% and its required rate of return is 14%, what is the net present value of this project?
A) $70,091
B) -$27,920
C) $64,091
D) -$31,520
Correct Answer:
Verified
Correct Answer:
Verified
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