Prime Petroleum Inc. is considering an acquisition of a new production facility in order to expand production of it its main product, a gasoline additive Gas Gain. The cost of construction (first cost) is $9,000,000. The annual operating cost is projected to be $700,000. The facility will be liquidated in 24 years, resulting in a salvage value inflow of $2,000,000. Assuming MARR of 4%, compute the annual worth of the project's cash flows, and type in your answer expressed as a cost (do not include negative sign with your answer).

Answer rating: 100% (QA)

The present value of annual cash flows is computed by multiplying the annual cash flows and the pres... View the full answer