is performing a post-audit of a project completed one year ago. The initial esti

Question

is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $230,068 nvestment has been in operation for 1 year, revised figures indicate that it actually cost $240,148, will have a total useful life of 11 years, and will produce net annual cash flows of $38,000 per year. Click here to view PV table Evaluate the success of the project. Assume a discount rate of 11%. (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 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value s Revised estimate net present value a success. The project Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

The project has not been successful due to negative NPV.

Past Present value at 11% The discount factor for 9 periods/years 5.53705 Present value of net cash flows: $44,200 X 5.53705 Net cash flows current value $244,738 Less: Capital investment $230,068 Original estimate Net present value $14,670

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.