Partida Inc. has provided the following data concerning a proposed investment project:
|
Initial investment |
$861,000 |
|
Annual cash receipts |
$603,000 |
|
Life of the project |
5 years |
|
Annual cash expenses |
$332,000 |
|
Salvage value |
$129,000 |
The company”s tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 3 years. The company uses a discount rate of 11%.
Required:
Compute the net present value of the project.