Final answer:
To determine the net present value of the project, calculate the annual after-tax cash flows, discount them using the cost of equity, and subtract the project's initial cost. The exact calculation would need to be performed to match one of the predetermined choices provided.
Step-by-step explanation:
To calculate the net present value (NPV) of the project for Jiminez, Incorporated, we need to discount the after-tax cash flows back to their present values and then sum them up. The calculation involves using the company's cost of equity as the discount rate, which is given as 11.7%. First, we find the annual after-tax cash flows by subtracting the tax impact from the revenue minus expenses. Since the company uses straight-line depreciation, we calculate the annual depreciation by dividing the initial cost of the project ($11.7 million) by the project's lifespan (6 years). The after-tax cash flow is calculated by taking the revenues minus expenses, subtracting depreciation, computing the tax on this amount, and then adding back the depreciation (since it's a non-cash expense).
Once we have the annual after-tax cash flows, we discount them back to the present value using the cost of equity. Finally, we subtract the initial cost of the project to get the NPV. Without the actual numerical calculations shown here, we cannot provide an accurate NPV figure. It is crucial to note that in the options provided, choice a, b, c, or d, this figure is predetermined, and the calculation would be intended to arrive at one of these figures, which requires precise computations.