Question

(Ignore income taxes in this problem.) Farah Corporation has provided the following data concerning a proposed investment project: Initial investment $ 660,000 Life of the project 9 years Working capital required $ 25,000 Annual net cash inflows $ 132,000 Salvage value $ 88,000 The company uses a discount rate of 12%. The working capital would be released at the end of the project. Required: Compute the net present value of the project. (Round "PV Factor" to 3 decimal places. Round your other intermediate calculations and final answers to the nearest whole dollar.)(Use Exhibit 11B-1, Exhibit 11B-2)

Answer 1

	Year(s)	Amount	12% Factor	Present value of cash flows
Initial investment	Now	-660000	1	-660000
Working capital invested	Now	-25000	1	-25000
Annual net cash inflows	1-9	132000	5.328	703296
Working capital released	9	25000	0.361	9025
Salvage value	9	88000	0.361	31768
Net present value				59089
Net present value = $59089