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Sarah Inc. is considering investing in a project that would require an initial investment of $460, 000. The life of the project would be 5
Sarah Inc. is considering investing in a project that would require an initial investment of $460, 000. The life of the project would be 5 years. The annual net cash inflows from the project would be $120, 000. The salvage value of the assets at the end of the project would be $69, 000. The company uses a discount rate of 15%. Required a. Compute the net present value of the project. Show your work. b. How much additional cash inflow would need to be generated per year to make this an attractive investment. (Yes, that's a clue that the NPV in part (a) is negative.)
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