California Hideaways Is Considering a New Project Whose Data Are

Multiple Choice

California Hideaways is considering a new project whose data are shown below. The equipment has a 4-year project life. This equipment falls into class 43 with a CCA rate of 30% and would have zero salvage value. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the project's 4-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 4.) WACC10.0%
Net investment cost$65,000
Sales revenues, each year$60,000
Cash operating costs$25,000
Tax rate35.0%

A) $28,499
B) $23,402
C) $19,417
D) $16,284