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Crazy Burger Shop has the following investment opportunity:
- Burger machinery at t=0 costs $6,000.
- The cost of making burgers is $2,000 per year at t=1, t=2, and t=3.
- The burger machinery is
depreciated using the straight-line method to $1,500 over 3 years. - The market value of the burger machinery after three years is $2,600.
- Estimated annual sales are $4,500 per year at t=1, t=2, and t=3.
- The required return is 15%.
- The tax rate is 18%.
- Assume no working capital requirements.
What is the NPV of this project?
| A. |
$259.97 |
|
| B. |
$1,006.62 |
|
| C. |
$876.44 |
|
| D. |
$-702.92 |
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