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St. Margaret Beer Co. is considering a three-year project that will require an initial investment of $44,000. If market demand is strong, St. Margaret Beer
St. Margaret Beer Co. is considering a three-year project that will require an initial investment of $44,000. If market demand is strong, St. Margaret Beer Co. thinks that the project will generate cash flows of $28,500 per year. However, if market demand is weak, the company believes that the project will generate cash flows of only $2,000 per year. The company thinks that there is a 50% chance that demand will be strong and a 50% chance that demand will be weak. If the company uses a project cost of capital of 10%, what will be the expected net present value (NPV) of this project? (Note: Do not round intermediate calculations and round your answer to the nearest whole dollar.) -$5,165 -$6,380 -$6,076 -$6,987
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