Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $643,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $168,000 at the end of the project. The project requires $38,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $197,400 a year. What is the net present value of this project if the relevant discount rate is 14 percent and the tax rate is 21 percent?

Multiple Choice

a. $22,138

b. $19,924

c. $4,753

d. $23,841

• $16,811