Answer:
NPV = $19325
so correct option is e. $19,325
Explanation:
given data
Risk-adjusted WACC = 10.0%
Net investment cost = $65,000
depreciation rate= 33.3333%
Sales revenues= $65,500
Operating costs = $25,000
Tax rate = 35.0%
solution
we know here EBT that is express as
EBT = sales - depreciation - operating cost
EBT = 65500 - 21666.67 - 25000
EBT = 18833.33
and
tax is 35 % = 35 % of 18833.33 = 6591.67
and
EAT = EBT - tax
EAT = 18833.33 - 6591.67
EAT = 12241.67
and
net cash flow is here = EAt + depreciation adj
net cash flow = 12241.67 + 21666.67
net cash flow = 33908.33
and
NPV = pv cashflow - PV investment
NPV = 84325 - 65000
NPV = $19325
so correct option is e. $19,325