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The Weyland - Yutani Corporation is considering a new four - year expansion project that requires an initial fixed asset investment of $ 4 0

The Weyland-Yutani Corporation is considering a new four-year
expansion project that requires an initial fixed asset investment
of $400,000. The fixed asset will be depreciated straight line to
zero over its four-year tax life. The fixed asset will have a market
value of $225,000 at the end of the projects life. The project
requires an initial investment in net working capital of $275,000.
The working capital will be recovered at the end of the projects
four-year life. The project is estimated to generate $1,100,000 in
annual sales, with annual costs of $800,000. The tax rate is 35
percent and the firm uses an abnormally high discount rate of 30
percent for the project.
Compute the initial investment (CF0) on this project.
a) $-675,000
b) $-225,000
c) $-400,000
d) $-775,000
e) $-275,000

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