Citrus Company is considering a project that has estimated annual net cash flows
ID: 2438751 • Letter: C
Question
Citrus Company is considering a project that has estimated annual net cash flows of $23,430 for four years and is estimated to cost $110,000. 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.) Based on NPV, determine whether project is acceptable to Citrus. Unacceptable Acceptable rev: 04_23_2018_QC_CS-125350
Explanation / Answer
Net present value = Present value of cash inflow-Present value of cash outflow
= (23430*3.46511)-110000
Net present value = -28812.47
Project is unacceptable