Marasco Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment$80,000 Salvage value of equipment$0 Expected life of the project 4 Annual sales$220,000 Annual cash operating expenses$160,000 One-time renovation expense in year 3$30,000 The income tax rate is 30%. The after-tax discount rate is 13%. The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $20,000. 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. $128,199
B. $91,000
C. $77,650
D. $48,199
Answer: D
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