ELK,IncHas Compiled This Information for a Proposed Project: Sales Price

Multiple Choice

ELK,Inc.has compiled this information for a proposed project: sales price = $89 ±3 percent; fixed costs = $21,800 ±1 percent; variable cost per unit = $42.90 ±3 percent; sales quantity = 1,500 units ±5 percent; tax rate = 34 percent; initial investment in fixed assets = $36,500; depreciation method = straight-line to a zero book value over the project's life; project life = 4 years; salvage value of fixed assets = $0; net working capital requirement = $4,800,which will be recouped at the end of the project; discount rate = 12 percent.What is the project's net present value for the pessimistic scenario?

A) $40,661.08
B) $47,422.30
C) $45,899.21
D) $44,371.15
E) $52,222.12