TexMex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce their pre-tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

WACC 10%

Pre-tax cash flow reduction for other products -$5,000

Investment cost (depreciable basis) $80,000

Straight-line depr. rate 33.333%

Annual sales revenues $68,000

Annual operating costs -$25,000

Tax rate 35%

a. $3940

b. 4636

c. 5192

d. 4358

e . 3570