Question $1$

Gateway Communications is considering a project with an initial fixed assets cost of $$1\mathrm{.}67$ million that will be depreciated straight$-$

line to a zero book value over the $10-$year life of the project. At the end of the project the equipment will be soid for an estimated

$$225,000.$ The project will not change sales but will reduce operating costs by $$380,000$ per year. The tax rate is $35$ percent and the

required return is $9\mathrm{.}9$ percent. The project will require $$45,000$ in net working capital, which will be recouped when the project ends.

What is the project's NPV$?$

$$292,147$

$$282,723$

$$271,849$

$$233,733$

$$244,357$