MontRec Company Is Considering a Recycling Project

MontRec Company is considering a recycling project.The project will result in a decrease in their garbage disposal costs.The acquisition cost of the recycling machine is $100,000 and the present value of the net garbage disposal cost savings is calculated to be $25,000.The present value of the depreciation tax shield (CCA) is $35,000 and the machine is expected to have a zero salvage value.The firm can lease the machine instead of buying it - the present value of the before-tax lease payments is $60,000 and the present value of the tax savings from the lease payments is $50,000.Should the firm enter into the recycling project? Choose the most appropriate answer.

A) Yes, the NPV of the project is $15,000.
B) Yes, the NPV of the project is $55,000.
C) Yes, the NPV of the project is $80,000.
D) No, the NPV of the project is -$40,000.