Problem:
Travis & Sons has a capital structure which is based on 45 percent debt, and 55 percent common stock. The pre-tax cost of debt is 7.5 percent, and the cost of common stock is 13 percent. The company's tax rate is 39 percent. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $325,000 and annual cash inflows of $87,000, $279,000, and $116,000 over the next three years, respectively.
Required:
Question: What is the projected net present value of this project?
Note: Please show how to work it out.