Juliar Inc. has provided the following data concerning a proposed investment pro

Question

Juliar Inc. has provided the following data concerning a proposed investment project: (Ignore income taxes.)

Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.

Compute the net present value of the project. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  Initial investment $ 180,000     Life of the project 11 years   Annual net cash inflows $ 35,000   Salvage value $ 25,000

Explanation / Answer

NPV of the project:

NPV = PV of inflow - PV of outflow

PV of Outflow is = $180000

PV of inflow is = 35000*pvifa(13%,11)+25000*pvif(13%,11)

= 35000* 5.69 + 25000*.261

= $205675

NPV= 205675-180000 = $25675

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