An All-Equity Firm Is Analyzing a Potential Project Which Will

Multiple Choice

An all-equity firm is analyzing a potential project which will require an initial,after-tax cash outlay of $50,000 and after-tax cash inflows of $6,000 per year for 10 years.In addition,this project will have an after-tax salvage value of $10,000 at the end of Year 10.If the risk-free rate is 6 percent,the return on an average stock is 10 percent,and the beta of this project is 1.50,then what is the project's NPV?

A) $13,210
B) $4,905
C) $7,121
D) −$6,158
E) −$12,879