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Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value.
Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows:
Year | Net Income | Net Cash Flow |
1 | $75,000 | $280,000 |
2 | 100,000 | 300,000 |
3 | 109,000 | 200,000 |
4 | 36,000 | 120,000 |
$320,000 | $900,000 |
The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Required:
Determine the net present value. Enter negative values as negative numbers. $
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