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Burry Inc. has provided the following data to be used in evaluating a proposed investment project:
|
Initial investment |
$630,000 |
|
Annual cash receipts |
$553,000 |
|
Life of the project |
8 years |
|
Annual cash expenses |
$330,000 |
|
Salvage value |
$65,000 |
|
Tax rate |
40% |
For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 6 years. The company uses a discount rate of 7%.
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables. The net present value of the project is closest to: (Round discount factor(s) to 3 decimal places,
intermediate and final answer to the nearest dollar amount.
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