Bratton Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 13%Tax rate 30%Expected life of the project 4 Investment required in equipment$160,000 Salvage value of equipment$0 Annual sales$390,000 Annual cash operating expenses$280,000 One-time renovation expense in year 3$60,000 The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $40,000. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.See separate Exhibit 13B-1 to determine the appropriate discount factor(s) using table.The net present value of the project is closest to:
A. $75,580
B. $154,000
C. $104,686
D. $196,000
Answer: A
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