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 $41,535 for seven years and is estimated to cost $195,000. 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 $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.) Net Present Value Based on NPV, determine whether project is acceptable to Citrus. Unacceptable O Acceptable

Explanation / Answer

Net present value = Present value of cash inflow-Present value of cash outflow

                              = (41535*4.56376)-195000

Net present value = -5444

Unacceptable

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