When computing the net present value of the project what is

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Weichman Inc. has provided the following data concerning an investment project that has been proposed:

Initial investment

$960,000

Annual cash receipts

$624,000

Life of the project

8 years

Annual cash expenses

$281,000

Salvage value

$48,000

The company"s tax rate is 30%. For tax purposes, the entire initial investment will be depreciated over 7 years without any reduction for salvage value. The company uses a discount rate of 15%.

1. When computing the net present value of the project, what is the after-tax cash flow from the salvage value in the final year?

A) $48,000

B) $14,400

C) $33,600

D) $0

2. The net present value of the project is closest to:

A) $299,470

B) $288,483

C) $117,329

D) $128,316

Reference no: EM13567255

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