Aurora Housing Services Incorporated (AHSI) is considering a project that involves setting up a temporary...
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Aurora Housing Services Incorporated (AHSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. AHSI will lease space in this facility to various agencies and groups providing relief services to the area. AHSI estimates that this project will initially cost $5 million to set up and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million. AHSI will require no working capital for this investment. AHSI's marginal tax rate is 21%. Assume that AHSI's cost of capital for this project is 15%. The NPV of this temporary housing project is closest to: Select one: O A. -$650,000 B. $791,667 C. $435,000 D. -$435,000
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