Question
Your boss is considering a 5-year investment project. If the project is accepted, it would require an immediate spending of $653 to buy all necessary
Your boss is considering a 5-year investment project.
If the project is accepted, it would require an immediate spending of $653 to buy all necessary production equipment. This equipment would be sold at the end of the project and bring your company estimated $137 in sale proceeds after taxes (or after-tax salvage value).
The team recommends immediately setting aside $57 in cash to cover any unforeseen expenses.
Your boss's consulting team also estimated that the annual after-tax profits (or operating cash flows) would equal $158.
The required annual rate of return is 8.1%.
What is the Net Present Value of this proposed investment project?
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