The Horizon Company will invest $79,000 in a temporary project that will generate the following cash inflows for the next three years. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year Cash Flow

1 $ 22,000

2 35,000

3 42,000

The firm will also be required to spend $21,000 to close down the project at the end of the three years.

a. Compute the net present value if the cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

Net present value

b. Should the investment be undertaken?

No

Yes