Question
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 600,000 Annual net income $ 60,000 Expected life 8 years
Merrill Corp. has the following information available about a potential capital investment:
| Initial investment | $ | 600,000 | |||||
| Annual net income | $ | 60,000 | |||||
| Expected life | 8 | years | |||||
| Salvage value | $ | 70,000 | |||||
| Merrills cost of capital | 7 | % | |||||
Assume straight line depreciation method is used.
Required: 1. Calculate the projects net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
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3. Calculate the net present value using a 14 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)
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