Use the Information for the Question(s)below

Multiple Choice

Use the information for the question(s) below.
Temporary Housing Services (THS) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a cyclone. THS will lease space in this facility to various agencies and groups providing relief services to the area. THS estimates that this project will initially cost $6 million to set up and will generate $22 million in revenues during its first and only year of operation (paid in one year) . Operating expenses are expected to total $13 million during this year and depreciation expense will be another $4 million. THS will require no working capital for this investment. THS's marginal tax rate is 30%.
-Assume that THS's cost of capital for this project is 15%. The net present value (NPV) of this temporary housing project is closest to:

A) -$435 000
B) $520 000
C) $1 960 000
D) -$650 000