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Tom and Erdal are planning on forming the TopTorque Company. The company is to specialize in diesel engine rebuilding for extractive industries. The investment cost

Tom and Erdal are planning on forming the TopTorque Company. The company is to specialize in diesel engine rebuilding for extractive industries. The investment cost is expected to be $1.5 million and have aftertax cash flows of $100,000 in year 1, $250,000 in year 2, and $300,000 thereafter indefinitely. The two owners estimate that this is a risky venture and requires a 17% rate of return. What is the value of TopTorque, and should the investment be made?

A. $57,240 yes

B. $1,557,240 yes

C. $57,240 no

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