An all equity financed project has a 5-year life and is expected to generate the following net income:

year 1: $88 year 2: $99 year 3: $97 year 4: $118 year 5: $119

The project has no working capital. The production equipment for the project was purchased at time 0 for $831 and depreciated straightline to $0 over the life of the project. The equipment has no salvage value at the end of the project.

The project cost of capital is 5.9%. The tax rate is 27%.

How much lower is the project NPV calculated based on expected cash flows vs the project NPV based on expected NI? Give your answer to the nearest whole dollar.

Selected Answer:	'
Correct Answer:	129 1