Byerly Corporation has provided the following data concerning an investment proj
ID: 2601152 • Letter: B
Question
Byerly Corporation has provided the following data concerning an investment project that it is considering:
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
The working capital would be released for use elsewhere at the end of the project. The net present value of the project is closest to:
Multiple Choice
$(105,847)
$(151,658)
$11,000
$(44,847)
Initial investment $ 670,000 Working capital $ 61,000 Annual cash flow $ 227,000 per year Salvage value at the end of the project $ 20,000 Expected life of the project 3 years Discount rate 10 %Explanation / Answer
Net present value :
Net present value = Present value of cash inflow-present value of cash outflow
= (227000*2.487+20000*0.751+61000*.751)-(670000+61000*1)
Net present value = (105620)
so answer is a) (105847)
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