Brief Exercise 26-6 Quillen Company is performing a post-audit of e project comp

Question

Brief Exercise 26-6 Quillen Company is performing a post-audit of e project completed one year ego, The intial estimetes were thet the project would cost $221,271, would have a useful life of 9 years, zero savege value, and would result in net annuel cash flows of $44,300 per yeer, Now that the investment has been n operation for 1 year, revised figures indicate that it actuely cost S220.491, ill heve useful life of 11 years, and wil produce net annual cash flows of $36,272 per year (Refer the below table) If the net present value is negative use either a negative gn preceding the number eg 45 or pare theses eg 45). Round present value answers to 0 decimal places e 125 Round Discount Factor to 5 Evaluate the success of the pro ect. Assume a discount rate of 12% decimal places, e.g. 0.1 7986. ) Original estimate net present value Revised estimate net present value The project a success.

Explanation / Answer

Original estimate net present value=(44300*5.32825)-221271= 14770 Revised estimate net present value=(36272*5.93770)-220491= -5119

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