Benton Inc. is considering a five-

year investment

in a plant that will cost $14,000. The plant

produces 2,000 widgets annually. At the end of the year, the variable cost is $6.50

per

widget, the sales price is $9.50

per widget, and the fixed costs are $1,000 annually. The

sales price is growing annually by 5% and variable cost is growing annually by 3%. The cost

of the plant is depreciated over 6 years at the following rates: 20%, 32%, 19.2%, 11.52%,

11.52%, and 5.76%. The salvage value after five years is $1,

750. The appropriate nominal

discount rate is 12% and the corporate tax rate is 35%. The required net working capital is

$1,500 per year and it is recovered at the end of the project. The company expects to sell all

widgets produced each year.

1. Calculate the NPV of this project