Douglas, Inc. sells ski equipment and has an after-tax cost of capital of 8.5%. Michael Co. sells snowmobiles and has an after-tax cost of capital of 12%. Douglas, Inc. is considering adding snowmobiles as part of its sales line up. It estimates that sales from these snowmobiles could become 15% of its overall sales. The initial cash outlay for this project is $85,000. The expected net cash inflows are $18,000 a year for eight years. What is the net present value of this project to Douglas, Inc.?

Multiple Choice

$4,417.52

$59,000.00

$25,953.63

($2,586.36)

$7,583.25