The Lunch Counter is expanding and expects operating cash flows of $49,500 a year for nine years as a result. This expansion requires $36,500 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $2,200 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 15.6 percent?
A) $194,736.05
B) $201,033.33
C) $192,536.05
D) $188,569.91
E) $193,132.81

Question

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The Answer of The Lunch Counter is expanding and expects operating cash flows of $49,500 a year for nine years as a result. This expansion requires $36,500 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $2,200 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 15.6 percent?
A) $194,736.05
B) $201,033.33
C) $192,536.05
D) $188,569.91
E) $193,132.81

The Lunch Counter Is Expanding and Expects Operating Cash Flows