Topperton Company has developed a new industrial product. Anoutlay of $8 million is required for equipment to produce the newproduct, and additional net working capital of $400,000 is requiredto support production and marketing. In addition, a one-time$400,000 (before-tax) expense will be incurred the year that theequipment is placed into service. The equipment will be depreciatedon a straight-line basis to a zero book value over 6 years.Although the depreciable life is 6 years, the project is expectedto have a productive life of 8 years, and it is estimated that theequipment can be sold for $1 million at that time. Revenues minusexpenses are expected to be $3 million per year. The cost ofcapital for this project is 14%, and the relevant tax rate is 30%.What is the NPV of the new product?
Group of answer choices
$2,956,923
$3,326,891
$3,002,696
None of these
