Hand Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be

constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable cost should

rise with inflation. The project should last for 3 years, it will be depreciated on a straight-line basis, and there will be

no salvage value. This is just one of many projects for the firm, so any losses can be used to offset gains on other

firm projects. What is the project's expected NPV?

WACC 10.0%

Net investment cost (depreciable basis) $200,000

Units sold 60,000

Average price per unit, Year 1 $28.00

Fixed op. cost excl. deprec. (constant) $150,000

Variable op. cost/unit, Year 1 $22.00

Annual depreciation rate 33.333%

Expected inflation rate per year 7.00%

Tax rate 40.0%

A. 554681

B. 234578

C. 113790

D. 215670