Sheridan Company is performing a post-audit of a project completed one year ago. The initial estimates...
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Sheridan Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $244,000, would have a useful life of 9 years and zero salvage value, and would result in net annual cash flows of $46,700 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $254,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $40,100 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 11%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value Revised estimate net present value $ The project $ a success. Sheridan Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $244,000, would have a useful life of 9 years and zero salvage value, and would result in net annual cash flows of $46,700 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $254,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $40,100 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 11%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value Revised estimate net present value $ The project $ a success.
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Answer rating: 100% (QA)
Original Net annual cash flows X PV factor 45200 575902 11109010 Present value ... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-0470477144
5th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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