Fibertech is deciding on opening a new plant. The new plant will be located on the existing land, which the company purchased 2 years ago for $1 million. The company has also spent $300,000 for market research.

If the plant is not opened the company will rent out the land for $200,000 per year. The expected sales of the new plant are $2.3 million per year for the next 5 years. The new plant's construction costs are $2 million (Year 0), the requirement for NWC is $200,000 in year 0, which will recover in year 5. The plant should be depreciated over 5 years using the straight-line method. Cost of sales is expected to be 40% os sales. Administrative expenses are $300,000 every year. Tax rate is 20%. What is the NPV of this project if the cost of capital is 15%?

Possible answers:

a. -$813,337

b. $527,525

c. $1,063,870

d. $428,090

e. -$437,896