Question
In 2019, Easy Breathy started selling cloth face masks on Etsy. In 2019, they spent $4,000 on capital expenditures (unrecoverable) and increased their net working
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In 2019, Easy Breathy started selling cloth face masks on Etsy. In 2019, they spent $4,000 on capital expenditures (unrecoverable) and increased their net working capital by $5,000 that will be recovered at the end of the project. In 2020, 2021, and 2022 (expected) they earned an operating cash flow of $9,000 per year. Before the end of 2022, they expect to close the Etsy shop. In 2019, no one believed that masks were a thing. The project was so risky and so crazy its WACC is 15%. What is the net present value of the project?
A. $12,901.40
B. None of these
C. $18,000.00
D. $14,836.61
E. $11,549.03
In 2019, Easy Breathy started selling cloth face masks on Etsy. In 2019, they spent $4,000 on capital expenditures (unrecoverable) and increased their net working capital by $5,000 that will be recovered at the end of the project. In 2020, 2021, and 2022 (expected) they earned an operating cash flow of $9,000 per year. Before the end of 2022, they expect to close the Etsy shop. In 2019, no one believed that masks were a thing. The project was so risky and so crazy its WACC is 15%. What is the net present value of the project?
| A. | $12,901.40 | |
| B. | None of these | |
| C. | $18,000.00 | |
| D. | $14,836.61 | |
| E. | $11,549.03 |
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