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Find the working capital released at the end of the project

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Gillaspie, Inc., is considering the purchase of a machine that would cost $300,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $51,000. The machine would reduce labor and other costs by $86,000 per year. Additional working capital of $10,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 13% on all investment projects.

Question 1: The combined present value of the working capital needed at the beginning of the project and the working capital released at the end of the project is closest to:

Select one:

Option a. -$8,420

Option b. $25,170

Option c. -$4,570

Option d. $0

Reference no: EM132547325

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