In addition to a one-million-dollar acquisition cost, an investment requires $200,000 of working capital during its five year useful life. If this was not included in the analysis, what would the impact be on the net present value (NPV) computed? Tax rate is 40% and required return, i, is 10%.

Group of answer choices

NPV would understated by $120,000

NPV would be overstated by $45,480

NPV would be overstated by $75,800

NPV would be understated by $200,000