The Lunch Counter Is Expanding and Expects Operating Cash Flows

Multiple Choice

The Lunch Counter is expanding and expects operating cash flows of $49,500 a year for nine years as a result. This expansion requires $36,500 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $2,200 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 15.6 percent?

A) $194,736.05
B) $201,033.33
C) $192,536.05
D) $188,569.91
E) $193,132.81