Calculate the proposal net present value

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Question - Corporation is reviewing an investment proposal that has an initial cost of $52,500. An estimate of the investment's end-of-year book value, the yearly after-tax net cash inflows, and the yearly net income are presented in the schedule below. The investment's salvage value at the end of each year is equal to book value, and there will be no salvage value at the end of the investment's life.

Initial Cost and Book Value Yearly After-Tax net Cash Inflows Yearly net Income

Year

1 35000 20000 2500

2 21000 17500 3500

3 10500 15000 4500

4 3500 12500 5500

5 0 10000 6500

Uses a 14% after-tax target rate of return for new investment proposals.

Required: Calculate the proposal's net present value. Round to the nearest dollar.

Reference no: EM131773297

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