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?
WACC ................................10.0%
Pre-tax cash flow reduction for other products (cannibalization) .......-$5,000
Investment cost (depreciable basis) .....................$80,000
Straight line depreciation rate .....................33.333%
Sales revenues, each year for 3 years .................,...$73,500
Annual operating costs (excl. depr.) ...................-$25,000
Tax rate ...............................35.0%