Page Virw Quick Calib KA Gm Be Copy Formater Paste Bu ..A 35 Wrap That BMerge a Canta Alignment 5 Chipboard pl For Number 034 X G A B D 4 ABC Company is studying a project that would have a five year life and 5 require a $1,600,000 investmentin equipment. At the end of five years, the 6 project would terminate and the equipment would have no value left over. 7 The project would provide net income each year as follows: 8 9 Sales 3,200,000 10 Less COGS 300,000 11 Gross Margin 2,900,000 12 13 Less: Operating Expenses 14 Advertising, Salaries and other fixed 1,300,000 15 Salary Expense 1,300,000 16 Amortization 100,000 17 Total Expenses 2,700,000 18 19 20 Net Income 200,000 21 22 The company's discount rate is 18% 23 24 1) compute the net annual cash inflow from project 25 26 2) compute the net present value of the project. Is it acceptable? 27 28 30 31 AL