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Net present value method (LO4) Altman Hydraulic Corporation will invest $160,000 in a project that will produce the cash flow shown below. The cost of capital is 1 1 percent. Should the project be undertaken? Use the net present value method. (Note that the third year's cash flow is negative.) Year Cash Flow 1........m... $54 000 66 000 (60.000) $7,000 120.000 Solution: PVIF (1 + ir Year Cash Flow PVIF at 11% Present Value $54,000 X 1901 $ 48.654 $66,000 812 53.592 (60,000) 731 (43.860) 57.000 659 37.563 120,000 593 71,160 Present value of inflows $167,109 Present value of outflows 160 000 Net present value $ 7.109 -0:09 1x