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Wet and wild water company drills small commercial oil

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Reference no: EM13581578

Wet and Wild Water Company drills small commercial oil wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below:

  • Investment in new drill $160,000
  • Working capital needed 32,000
  • Operations (per year for 4 yrs):
  • Cash receipts $160,000
  • Cash expenditures 88,000
  • Salvage value of oil drill 16,000
  • Discount rate 20%

What is the net present value of the investment? Assume there is no recovery of working capital at the end of the investment life.

Reference no: EM13581578

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