(Ignore income taxes in this problem.) Juliar Inc. has provided the following da

Question

(Ignore income taxes in this problem.) Juliar Inc. has provided the following data concerning a proposed investment project: Initial investment Life of the project Annual net cash inflows Salvage value $ 330,000 11 years $ 50,000 40,000 The company uses a discount rate of 9%. Click here to view Exhibit 8B-1 and Exhibit 8B-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.) Net present value

Explanation / Answer

Present value of inflows=$50000*Present value of annuity factor(9%,11)+$40000*Present value of discounting factor(9%,11)

=(50000*6.805)+(40000*0.388)

=$355770

NPV=Present value of inflows-Present value of outflows

=$355770-$330,000

=$25770.

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