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The Umbrella Corporation is considering expanding one of its production facilities to research a new type of zombie, which will hopefully not result in another

The Umbrella Corporation is considering expanding one of its production facilities to research a new type of zombie, which will hopefully not result in another zombie outbreak. The project would require a $21,000,000 capital investment and will be depreciated (straight-line to zero) over its 3 year life. They know that they will be able to salvage $8,500,000 for the equipment at that time.
Incremental sales are expected to be $15,750,000 annually for the 3 year period with costs (excluding depreciation) of 30% of sales. The company would also have to commit initial working capital to the project of $2,500,000. The company has a 30% tax rate, and requires a 12.5% rate of return for projects of this risk level.
Project cash flow (Cash Flow From Assets) for Year 3 is:
Select one:
a. $10,826,250
b. $18,267,500
c. $9,340,844
d. $12,800,555
e. $13,800,000
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