UNT, Inc. is considering a project that requires the purchase of a machine that will cost $5.25 million. UNT will also n

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UNT, Inc. is considering a project that requires the purchase ofa machine that will cost $5.25 million. UNT will also need to addnet working capital of $100,000 immediately. The net workingcapital will be recovered in full at the end of the fifth year. Themachine will also cost $250,000 to ship and install in the firm’sfactory. Revenues are projected to be $3.5 million each yearfor the next five years. The equipment will be fully depreciatedstraight-line by the end of year 5. Cost of goods sold (notincluding depreciation) are predicted to be 50% of sales. Theequipment can be sold for $400,000 at the end of year 5. Assume thetax rate is 20% and the cost of capital is 9%. What is the NPV ofthis investment?
MULTIPLE CHOICE
$974,206
$1,026,200
$1,733,889
$909,213