Cullumber Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $223,000, would have a useful life of 9 years and zero salvage value, and would result in net annual cash flows of $44,600 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $226,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $37,100 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 12%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value $ Revised estimate net present value $ The project a success.
Cullumber Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $223,000, would have a useful life of 9 years and zero salvage value, and would result in net annual cash flows of $44,600 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $226,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $37,100 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 12%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value $ Revised estimate net present value $ The project a success.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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