Net Present Value, Basic Concepts

For discount factors use Exhibit $12$B$\mathrm{.}1.$

Wise Company is considering an investment that requires an outlay of $$600,000$ and promises an after$-$tax cash inflow of $$778,500$ one year from now. The company$$s cost of capital is$14\%.$

Required:

$1.$ Break the $$778,500$ future cash inflow into three components: $($a$)$ the return of the original investment, $($b$)$ the cost of capital, and $($c$)$ the profit earned on the investment. Now compute the present value of the profit earned on the investment. If required, round your answers to the nearest dollar.

$($a$)$ Return of the original investment $fill in the blank $1$

$($b$)$ Cost of capital $fill in the blank $2$

$($c$)$ Profit earned on the investment $fill in the blank $3$

Present value of profit

$fill in the blank $4$

$2.$ Conceptual Connection: Compute the NPV of the investment. Round your intermediate calculations and final answer to the nearest dollar.

$fill in the blank $5$