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 (PV table available).
Assume a discount rate of 12%
What is the original estimate net present value
What is the revised estimate net present value
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