Question: You are faced with making a decision on a large capital investment proposal. The capital investment amount is $$ 640,000$. Estimated annual revenue at the
You are faced with making a decision on a large capital investment proposal. The capital investment amount is $\$ 640,000$. Estimated annual revenue at the end of each year in the eight-year study period is $\$ 180,000$. Estimated annual yearend expenses are $\$ 42,000$, starting in year 1. These expenses begin decreasing by $\$ 4,000$ per year at EOY 4 and continue decreasing through EOY 8. Assuming a $\$ 20,000$ market value at EOY eight and a MARR $=12 \%$ per year, what is the present worth of this proposal? What is your conclusion about the acceptability of this proposal?
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To calculate the present worth of the capital investment proposal we need to follow these steps 1 Calculate the net cash inflows for each year Year 1 ... View full answer
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