Solution-What net present value of investment for forise

What net present value of investment for forise water co

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Reference no: EM132667859

Forise Water Company drills small commercial water wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below.

Initial investment:

Asset $700,000

Working capital $188,000

Operations (per year for four years):

Cash receipts $530,000

Cash expenditures $240,000

Disinvestment:

Salvage value of drill (existing) $120,000

Discount rate 18%

Problem 1: What is the net present value of the investment? Assume there is no recovery of working capital.

Group of answer choices

Option 1: $188,000

Option 2: $12,100

Option 3: $290,000

Option 4: $200,100

Reference no: EM132667859

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What net present value of investment for forise water co

Reference no: EM132667859

Reference no: EM132667859

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