TexMex Products is considering a new salsa whose data are shown below. The equipment has a constant capital cost allowance over its 3-year life with a zero salvage value. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the projects 3-year life. However, this project would compete with other TexMex products and would reduce the companys pre-tax annual cash flows. What is the projects NPV? (Hint: Cash flows are constant in Years 1 to 3. Actual CCA varies. The proposed CCA is for computational convenience.)

		WACC								10.0%
		Pre-tax cash flow reduction in other products (cannibalization)								$5,000
		Investment cost								$65,000
		Annual capital cost of allowance								$21,665
		Annual sales revenues								$75,000
		Annual cash operating costs								$25,000
		Tax rate							35.0%

Question 10 options:

	$25,269
	$26,599
	$29,325
	$27,929