Consider the same project described in the previous problem, where the equipment will cost $18,000,000. It will be depreciated by the straight-line method over six years, and the useful life of the project is also estimated to be six years. You expect annual sales to be $12,750,000. Fixed Costs are estimated at $1,750,000 and variable costs should be 55% of sales. Your firm faces a 30% marginal tax rate. You also expect that at the end of the six-year operating life, you will be able to sell the equipment for scrap for $5,000,000. Consider any capital gains taxes on this sell.

After the initial analysis, the members of the team realized that the firm will also need to carry $3,200,000 in net working capital through the life of the project to support the operation.

Given this additional consideration, re-estimate the Net Present Value of the investment given the firms requirement of a return of 9% on such projects.

Group of answer choices

$645,583

-$592,993

$1,937,527

-$646,362