Grapple, Inc. is hooked on the idea of a new investment project. The project requires a machine that costs $160,000 plus $40,000 in setup costs that will be expensed immediately. Also, $32,000 in additional net working capital will be needed for the project. The project is expected to have an 8-year life, but the machine will be depreciated to a book value of $10,000 over 6 years. The machine is expected to be sold for $15,000 at the end of the 8 years. Revenues minus costs are expected to be $58,000 per year. The cost of capital is 14%. The relevant tax rate is 40%. Compute the NPV of the Grapple project.

Time Item Before-tax cash flow After-tax cash flow Present value

0 Initial outlay -160,000 -160,000 -160,000