You plan to open your own wine business. The cost of plant, property and equipment is $500,000. You already have the money for the initial cost which you could invest at the same level of risk and expect to earn 10%. You think you can sell 1 million bottles/year at $1/per bottle. Your costs are $200,000/per year to keep the factory running plus $0.50/bottle produced. Your tax rate is 50% and you plan to operate this business for 5-years. You plan to depreciate on a straight line basis to a book value of zero and the salvage value is expected to be zero. If you dont start a wine business you plan to keep working at your current job that pays $75,000/year (pre-tax, you would have to pay 50% tax on this income).

What is the NPV of opening the wine business?