Assume everything is given in n=0, CONSTANT dollars unless otherwise stated:

Hartsfield Company is considering purchasing a set of machine tools at a cost of $80,000. The purchase is expected to generate revenues of $26,000. The purchase of the tools will also lead to higher operating costs of $6,000 per year in each of the next three years.Additional profits will be taxed at a rate of 40%. The asset falls into CCA Class 45 (rate = 30%) for tax purposes and the 50% rule applies. The project has a three-year life. Theconstant-dollarmarket (re-sale) value of the machine tools is expected to fall by 20% annually. The company will require a working capital of $12,000 to bemaintained in purchasing powerover the lifetime of the project, and can be recovered at the time of the project's completion.

The general inflation rate is 8% per year (and affects everything that it normally affects).Assume aMARR' =5%.

(Remember to round up/down to whole dollar figures for EVERY entry in the income statement and cash flow statement. Solutions are also rounded to the nearest dollar.Note: .5 rounds up)

Find the NPW of the project.

a) -13,377

b) -11,187

c) -8462

d) -6510

e) None of the other answers

f) -6857