Exhibit 11B-2 http://lectures.mhhe.com/connect/0078025419/Exhibit/Exhibit%2011B-

Question

Exhibit 11B-2   http://lectures.mhhe.com/connect/0078025419/Exhibit/Exhibit%2011B-2.JPG

15 You did not receive credit for this question in a previous attempt Juliar Inc. has provided the following data concerning a proposed investment project: (Ignore income taxes.) $130,000 16 years $ 30,000 $ 20,000 Initial investment Life of the project Annual net cash inflows Salvage value Th e company uses a discount rate of 7% Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required 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.) Net present value$ 160,190

Explanation / Answer

Net Present Value of the Project = ($30000 x PVIFA of 16 years) + ($20000 x PVIFof 16th year) - Initial Investment

= ($30000 x 9.447) + ($20000 x 0.339) - $130000

= $283410 + $6780 - $130000

= $160190

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