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Brief Exercise 13.6 Martelle Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost
Brief Exercise 13.6 Martelle Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $261,000, would have a useful life of nine years and zero salvage value, and would result in net annual cash flows of $44,200 per year. Now that the investment has been in operation for one year, revised figures indicate that it actually cost $268,000, will have a useful life of 11 years, and will produce net annual cash flows of $36,900 per year. Assume a discount rate of 8%. Click here to view PV table. Calculate the original and revised net present value. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Original net present value Revised net present value Does the project turn out as successful as predicted? The project as successful as predicted
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