Ontario Courier Service Is Considering Investing in a Capital Asset

Ontario Courier Service is considering investing in a capital asset that costs $64,000.The project also requires an investment in net working capital of $8,000.The project will generate annual after-tax operating income of $20,800 for the next four years.The asset has a CCA rate of 20 percent and is expected to sell for $7,200 at the end of four years.The firm's cost of capital is 15 percent and marginal tax rate is 35 percent.Assume the asset class remains open after the asset is sold.What is the ending after-tax cash flow?

A) $7,398
B) $15,200
C) $21,855
D) $23,002