Trade Federation Manufacturers (TFM)Ltd Is Looking to Expand Its Production

Trade Federation Manufacturers (TFM) Ltd is looking to expand its production facilities in Hong Kong.Mr Nute Gunray,the finance manager of TFM,estimates the new facilities will require an initial outlay of $9.2 million and will generate EBDIT of $3.4 million each year for 5 years.There is expected to be no salvage value.Furthermore,$4 million of the initial outlay is depreciable for tax purposes on a straight- line basis over 5 years.The company pays tax at a rate of 30% and has a cost of capital of 11.5% p.a.Mr Gunray expects to finance the project using a mix of debt and equity and has determined that the interest expenses will be $0.8 million per year.What is the NPV of the project?

A) $1,238,650.64
B) - $513,290.72
C) - $1,681,251.63
D) $362,679.95