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MCentral Heating Co. is considering a project with the following financial characteristics: Fixed capital outlay is $1.5 billion Investment in net working capital is $0.4

MCentral Heating Co. is considering a project with the following financial characteristics:

Fixed capital outlay is $1.5 billion

Investment in net working capital is $0.4 billion.

Straight-line depreciation is over a six-year period with 0 salvage value.

Project life is 12 years.

Additional annualrevenesare $0.1 billion.

Annual cash operating expenses are reduced by $0.25 billion.

The capital equipment is sold for $1.5 billion in 12 years.

Tax rate is 40%.

Required rate of return is 12%.

Will this project have a postive effect on Mcentral HeatingCo's stock price?What's your estimation of this project NPV?

A. No. The NPV is $0.15 billion

B. Yes. The NPV is $-0.01 billion

C. Yes. The NPV is $0.15 billion

D. No. The NPV is $-0.01 billion

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