Capital Budgeting and opportunity cost of capital
Wiley Co. is considering an investment of $200,000 in a project with a 5 year economic life. After tax net income from the project has been calculated at $22,00 per year including a deduction for depreciation of $30,000 per year. The residual or salvage value at the end of 5 years is $50,000. Wiley Co.'s required rate of return is 10%.
1.The present value of the annual cash inflows for the project is?
2.The present value of the residual value is?
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