Chapter 12, Problem 11F15

To determine

NPV is computed by deducting initial investment amount from the present value. Here, after salvage, initial investment amount is $2,675,000 as computed below and present value at 14% is $3,431,000 as computed in previous part of this question. Present value of cash outflows is $2,975,000 that is given in the question.

Particulars	Amount ($)
Cash out flows	2,975,000
(-) Salvage value	300,000
Initial Investment	2,675,000

The project’s NPV would be lower or higher, when salvage is $300,000.