Question: After estimating a projects NPV, the analyst is advised that the fixed capital outlay will be revised upward by $100,000. The fixed capital outlay is

After estimating a project’s NPV, the analyst is advised that the fixed capital outlay will be revised upward by $100,000. The fixed capital outlay is depreciated straight-line over an eight-year life. The tax rate is 40 percent, and the required rate of return is 10 percent. No changes in cash operating revenues, cash operating expenses, or salvage value are expected. What is the effect on the project NPV?

a. $100,000 decrease.

b. $73,325 decrease.

c. $59,988 decrease.

d. No change.

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