Chene Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment$200,000 Annual sales$470,000 Annual cash operating expenses$340,000 The equipment will have a 4 year expected life and zero salvage value. The company's income tax rate is 30% and the after-tax discount rate is 10%. The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $50,000. 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. $169,516
B. $135,914
C. $224,000
D. $335,914
Answer: B
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