Question

Partially correct answer. Your answer is partially correct. Try again. Quillen Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $255,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $43,000 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $261,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $36,000 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 8%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value $Entry field with incorrect answer Revised estimate net present value $Entry field with incorrect answer The project Entry field with correct answer a success.

Answer 1

Year	Cash Flow	PV Factor	PV
		1 / (1 + 8%)^Year	Cash flow X PV Factor
0	$            (261,000)	1	$                 (261,000.00)
1	$                 36,000	0.92593	$                      33,333.48
2	$                 36,000	0.85734	$                      30,864.24
3	$                 36,000	0.79383	$                      28,577.88
4	$                 36,000	0.73503	$                      26,461.08
5	$                 36,000	0.68058	$                      24,500.88
6	$                 36,000	0.63017	$                      22,686.12
7	$                 36,000	0.58349	$                      21,005.64
8	$                 36,000	0.54027	$                      19,449.72
9	$                 36,000	0.50025	$                      18,009.00
10	$                 36,000	0.46319	$                      16,674.84
11	$                 36,000	0.42888	$                      15,439.68
			$                      (3,997.44)