A manager is considering the following investment: Estimated capital investment$270,000 Estimated useful life3 years Estimated disposal value
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Question:
A manager is considering the following investment:
Estimated capital investment$270,000
Estimated useful life3 years
Estimated disposal value in 3 years$10,000
Estimated annual savings in cash operating costs$150,000
Minimum desired rate of return12%
Present value of ordinary annuity, 3 periods at 12%2.4018
Present value of one, 3 periods at 12%0.7118
Assume straight-line depreciation is used. Ignore income taxes.The net present value of the investment is ________.
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