Problem:
Bruno's Lunch Counter is expanding and expects operating cash flows of $26,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $3,000 of net working capital throughout the life of the project.
Required:
Question: What is the net present value of this expansion project at a required rate of return of 16 percent?
Note: Please provide reasons to support your answer.