What Happens to the NPV of a One-Year Project If

Multiple Choice

What happens to the NPV of a one-year project if fixed costs are increased from $400 to $600, the firm is not profitable, has a 15% tax rate and employs a 12% cost of capital?

A) NPV decreases by $200.00
B) NPV decreases by $178.57
C) NPV decreases by $130.00
D) NPV decreases by $113.04 Increase fixed costs by $200
Present value of $200 at 12% for 1 year = $178.57.