M11-5 Calculating Net Present Value [LO 11-3] Citrus Company is considering a pr
ID: 2526201 • Letter: M
Question
M11-5 Calculating Net Present Value [LO 11-3]
Citrus Company is considering a project that has estimated annual net cash flows of $35,145 for eight years and is estimated to cost $165,000. Citrus’s cost of capital is 6 percent.
Determine the net present value of the project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your final answer to 2 decimal places.)
Explanation / Answer
Calculation of net present value: Time PVF @6% Amount PV - 1.00 -1,65,000.00 -1,65,000.00 1.00 0.9434 35,145.00 33,155.66 2.00 0.8900 35,145.00 31,278.92 3.00 0.8396 35,145.00 29,508.42 4.00 0.7921 35,145.00 27,838.13 5.00 0.7473 35,145.00 26,262.39 6.00 0.7050 35,145.00 24,775.84 7.00 0.6651 35,145.00 23,373.43 8.00 0.6274 35,145.00 22,050.41 53,243.20 Net present value is $53243.20
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