You are practicing for 2 and come across a project evaluation problem that includes the following estimates:

The life of the project is 7 years

The project will require additional equipment that will cost $21,000. None of the equipment will have any salvage value (you realize that this means no need to worry about after tax salvage value, and said "nice").

Sales are expected to be 10,000 units per year at $4.50 per unit

Variable costs are expected to be $2.60 per unit

Fixed costs are expected to be $12,000 per year

The annual Depreciation expense would be $3,000

Additional Net Working Capital will be needed in Year 0 in the amount of $8,000. 60% of this will be recovered in Year 7

The company's tax rate is 20%

The Required Rate of Return on the project is 10%

What is the project's Net Present Value?

Question 9 options:

	$921.04
	$3,167.68
	$8,543.04
	$3,647.36