Century Roofing Is Thinking of Opening a New Warehouse, and the Key

Century Roofing is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new warehouse. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) $\begin{array}{lr}\text { Project cost of capital (r) } & 10.0 \% \\\text { Opportunity cost } & \$ 100,000 \\\text { Net equipment cost (depreciable basis) } & \$ 65,000 \\\text { Straight-line deprec. rate for equipment } & 33.333 \% \\\text { Sales revenues, each year } & \$ 123,000 \\\text { Operating costs (excl. deprec.) , each year } & \$ 25,000 \\\text { Tax rate } & 35 \%\end{array}$

A) $10,521
B) $11,075
C) $11,658
D) $12,271
E) $12,885