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The Horizon Company will invest $52,000 in a temporary project that will generate the following cash...

The Horizon Company will invest $52,000 in a temporary project that will generate the following cash inflows for the next three years. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year Cash Flow
1 $ 17,000
2 32,000
3 22,000

The firm will also be required to spend $11,000 to close down the project at the end of the three years.

a. Compute the net present value if the cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
  


b. Should the investment be undertaken?
  

  • No

  • Yes

Solutions

Expert Solution

I HAVE USED PVIF TABLE TO SOLVE THE PROBLEM, NO EXCEL FUNCTION IS USED.

jeff jeffy answered 6 months ago
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