Wet and Wild Water Company drills small commercial water wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below:

Initial investment:

Depreciable Asset $160,000

Additional Working Capital $20,000

Operations (per year for four years):

Cash receipts $160,000

Cash expenditures $100,000

Disinvestment:

Salvage value of drill $10,000

(Resulting in additional cash inflow at the end of investment)

Discount Rate 10%

What is the net present value of the investment? Assume there is a recovery of working capital.

1. $20,600

2. $30,657

3. $10,140

4. $30,140