Tiff Corporation has provided the following data concerning a proposed investment project Initial investment ......................$960,000 Life of

Question:

Tiff Corporation has provided the following data concerning a proposed investment project

Initial investment ......................$960,000

Life of the project ........................6 years

Working capital required ...........$20,000

Annual net cash inflows ..........$288,000

Salvage value ..........................$144,000

The company uses a discount rate of 16%. The working capital would be released at the end of the project

Required:

Compute the net present value of the project.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...