Question
Quillen Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $222,000, would have
Quillen Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $222,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $44,400 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $235,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $38,500 per year. Evaluate the success of the project. Assume a discount rate of 12%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Original estimate net present value | $ | ||
Revised estimate net present value |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started