Question: Pool Corp has provided the following data related to a 5 year investment project that it is evaluating: Initial investment in equipment $ 500,000 Annual
Pool Corp has provided the following data related to a 5 year investment project that it is evaluating:
| Initial investment in equipment | $ | 500,000 |
| Annual net cash inflow | $ | 140,000 |
| Salvage value of equipment at the end of the project | $ | 14,000 |
| Working capital required | $ | 50,000 |
The working capital is put into the project immediately and is released back to the company at the end of the project. If the companys discount rate is 12%, the net present value of the project is closest to (factors from Exhibit 12B-1 and Exhibit 12B-2 for an interest rate of 12% are provided below).
| Period | Present value of $1 | Present value of an annuity |
| 1 | 0.893 | 0.893 |
| 2 | 0.797 | 1.690 |
| 3 | 0.712 | 2.402 |
| 4 | 0.636 | 3.037 |
| 5 | 0.567 | 3.605 |
| a. | ($ 9,012) | |
| b. | $34,288 | |
| c. | ($37,362) | |
| d. | $49,838 |
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