Vaughn Company has the following information about a potenti

Vaughn Company has the following information about a potential capital investment: $ $ Initial investment Annual cash inflow Expected life Cost of capital 400,000 70,000 10 years 11% 1. Calculate the net present value of this project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Net Present Value

Solution

Net present value = Present value of cash inflow-Present value of cash outflow

= (70000*5.88923)-400000

Net present value = 12246.10