Question
Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment $
Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows:
| Cost of new equipment | $ 210,000 |
|---|---|
| Working capital required | $ 50,000 |
| Annual net cash inflows | $ 100,000 |
| Maintenance and repairs in third year | $ 40,000 |
| Salvage value of equipment in fourth year | $ 25,000 |
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The working capital will be released at the end of the project and the companys required rate of return is 16%. The net present value of the project is closest to:
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Company Accounting
Authors: Ken Leo, John Hoggett, John Sweeting, Jennie Radford
8th Edition
0470819731, 978-0470819739
