Cardinal Company is considering a project that would require a $2,755,000 invest
ID: 2473927 • Letter: C
Question
Cardinal Company is considering a project that would require a $2,755,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $300,000. The company's discount rate is 14%. The project would provide net operating income each year as follows: Click here to view Exhibit 11B-1 and Exhibit 11B-2. to determine the appropriate discount factor(s) using tables. Required: What is the project's net present value? (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)Explanation / Answer
no of period 5 rate 14% PMT 1059000 FV 300000 PV $3,791,443.35 initial cost -2755000 NPV $1,036,443.35