You Have Been Asked to Evaluate an Infinitely-Lived Project

Multiple Choice

You have been asked to evaluate an infinitely-lived project. Sales in the first year are projected to be $100. Costs are projected at $50. There is no depreciation, and the tax rate is 30%. The real required return is 10%. The inflation rate is projected to be 8%. Sales and costs will increase at the rate of inflation. The project costs $300. What is the NPV?

A) $142.03
B) $36.36
C) $71.72
D) $50.00