Phone Home,Inc

Multiple Choice

Phone Home,Inc.is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million.The fixed asset will be depreciated straight-line to zero over its 4-year tax life,after which time it will have a market value of $225,000.The project requires an initial investment in net working capital of $330,000,all of which will be recovered at the end of the project.The project is estimated to generate $2,640,000 in annual sales,with costs of $1,056,000.The tax rate is 33 percent and the required return for the project is 15 percent.What is the net present value for this project?

A) $714,056
B) $681,409
C) $741,335
D) $742,208
E) $744,595