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What is the npv of the project using the wacc methodology

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The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $25,000 cash and borrow $75 ,000 with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project.

Question 1: There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the ?rm will sell 25 ,000 units of product at $5; variable costs are $3; there are no fixed costs. 15. What is the NPV of the project using the WACC methodology?

Option A. $58,028.68

Option B. $49,613.03

Option C. $48,300.47

Option D. $102,727.55

Option E. None of the above

Reference no: EM132499626

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