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The following information is available concerning a potential investment project: Initial investment .............. $180,000 Working capital needed now ...... ? Annual net cash inflows .........
The following information is available concerning a potential investment project: Initial investment .............. $180,000 Working capital needed now ...... ? Annual net cash inflows ......... $ 50,000 Cost of capital ................. 10% Life of project ................. 6 years Ignore the effects of income taxes in your calculations. Assume the working capital needed now will be released for investment elsewhere at the end of the project. The net present value of the project was calculated as $21,394. Calculate the amount of the working capital needed now. Do not place a minus sign in front of your answer when entering it into carmen. To answer this question use the present value table factors given below. No credit will be awarded for this question using a means other than the table factors given below to answer this question. Factors from the present value of a lump sum table for: i = 10% n = 4 n = 5 n = 6 n = 7 n = 8 0.683 0.620 0.565 0.513 0.467 Factors from the present value of an annuity table for: i = 10% n = 4 n = 5 n = 6 n = 7 n = 8 3.170 3.790 4.355 4.868 5.335
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