You were tasked to evaluate an expansion project and you collected the following information: Initial investment is $1m. Your annual EBIT is going to be $400,000, which is net of depreciation of $100,000 and before tax, whereby your corporate tax rate is 21%. At the project start, you need to build up inventory to a level $50,000 and at project end, in 3 years, you will release that inventory again and you are expected to recover the full $50,000. There are no other salvage value considerations for this project. Assuming a risk-adjusted discount rate of 7%, the net present value of this project equals

• a.($124,791)

• b.$898,828

• c.$82,530