A New 5-Year Project Has Expected Sales of 3,400 Units,±

Multiple Choice

A new 5-year project has expected sales of 3,400 units,± 8 percent; variable costs per unit of $22,± 2%; annual fixed costs of $47,500,± 2 percent; annual depreciation of $33,000; and a sale price of $45 a unit,± 3 percent.The project initially requires $165,000 of fixed assets and $42,000 of net working capital.At the end of the project,the net working capital will be recouped and the fixed assets will produce an aftertax cash inflow of $35,000.The tax rate is 21 percent and the discount rate is 14 percent.What is the net present value of the optimistic scenario?

A) −$28,026.15
B) −$28,799.24
C) −$22,584.66
D) $21,202.98
E) $18,566.01