Citrus Company is considering a project that has estimated annual net cash flows

Question

Citrus Company is considering a project that has estimated annual net cash flows of $29,820 for ten years and is estimated to cost $140,000. Citrus's cost of capital is 12 percent. Determine the net present value of the project. (Future Value of $1, Present Value of $1, Future Value Annuity of S1, 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.) Net Present Value Based on NPV, determine whether project is acceptable to Citrus. Acceptable OUnacceptable

Explanation / Answer

NPV = ($29,820 * 5.6502) - $140,000

NPV = $28,488.96

Since, the NPV is positive, the project is acceptable.

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