Hoosier Corporation is an entertainment company that produces and distributes digital content and operates its own amusement parks. The company is looking into expanding into a new market, Hoosiersville. There are several projects the CEO considers investing in to capture the values brought by the market. One of the projects pending approval is building a new amusement park in Hoosiersville with an initial investment of $45 million.

If the project gets approved, the company expects an annual sale of $19.6 million from ticket sales, food, and concessions at the park, with an expected growth of 2.5% annually. The annual operating expenses are expected to be 34% of sales, and the working capital is expected to be 10% of next years sales.

In addition, the CEO determines that the new park will need to buy a new rollercoaster which will have a $3 million upfront cost. The rollercoaster will be depreciated straight-line for eight years and is expected to have a salvage value of $550,000 based on the accounting department's best estimate when purchasing the rollercoaster.

If the company will be able to sell the rollercoaster for $600,000 at the end of the project and have a cost of capital of 14%, what is the project NPV?

Assume the corporate tax rate is 21%, and the remaining net working capital can be recovered at the end of the project.

Group of answer choices

None of the answers is correct

$2,046,669

$1,971,730

$2,040,145

$2,129,163