Problem $2,$Question $1$

A firm with WACC $10\%($i$.$e$.,$ your discount rate$)$ and tax rate $20\%$ evaluates a one$-$year investment plan that requires an initial investment of $$20,000.$

Half of this cost can be depreciated during the lifetime of the project. The project will allow the firm to offer a limited edition product that is expected

to sell $10,000$ units for $$4$ each over the next year. The variable cost is $$\frac{1}{?}$ unit.

What is the NPV of the project?

a$.1,818$

b$.10,909$

c$.3,333$

d$.6,000$

e$.7,272$

f$.5,454$

g$.26,000$

h$.3,636$