Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: $$\begin{array} { c c c }
\text { Year } & \text { Net Income } & \text { Net Cash Flow } \
1 & \$ 75,000 & \$ 280,000 \
2 & 100,000 & 300,000 \
3 & 109,000 & 200,000 \
4 & 36,000 & 120,000 \
& \$ 320,000 & \$ 900,000
\end{array}$$ The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine the net present value.

Question

Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: $$\begin{array} { c c c } 
\text { Year } & \text { Net Income } & \text { Net Cash Flow } \
1 & \$ 75,000 & \$ 280,000 \
2 & 100,000 & 300,000 \
3 & 109,000 & 200,000 \
4 & 36,000 & 120,000 \
& \$ 320,000 & \$ 900,000
\end{array}$$ The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine the net present value.

Quizplus · Accepted Answer

The Answer of Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: $$\begin{array} { c c c } 
\text { Year } & \text { Net Income } & \text { Net Cash Flow } \
1 & \$ 75,000 & \$ 280,000 \
2 & 100,000 & 300,000 \
3 & 109,000 & 200,000 \
4 & 36,000 & 120,000 \
& \$ 320,000 & \$ 900,000
\end{array}$$ The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine the net present value.

Dickerson Co The Company's Minimum Desired Rate of Return Is 12