Net present value. You are considering a four-year project that has the following pro forma statement:

In addition, you have estimated the project will require an increase in net capital spending of $1.8 million and an increase in net working capital of $450,000. If the firm’s WACC is 8%, what is the net present value? Should you accept or reject?

Pro forma income statement (annual) Sales COGS $2,056,280 1,205,000 Depreciation 86,000 EBIT 765,280 Interest 52,000 Taxable income 713,280 Taxes (21%) 149,789 Net income 563,491