Norton Company is considering a closed-loop geothermal heat pump to replace its existing heating system. The project will require an initial investment of $750,000 and will return $200,000 each year for five years.
(a) If taxes are ignored and the required rate of return is 9%, what is the project's net present value?
(b) Based on this analysis, should Norton Company proceed with the project?Below is a table for the present value of $1 at compound interest. Below is a table for the present value of an annuity of $1 at compound interest.

Question

Norton Company is considering a closed-loop geothermal heat pump to replace its existing heating system. The project will require an initial investment of $750,000 and will return $200,000 each year for five years.
(a) If taxes are ignored and the required rate of return is 9%, what is the project's net present value?
(b) Based on this analysis, should Norton Company proceed with the project?Below is a table for the present value of $1 at compound interest.​​  Below is a table for the present value of an annuity of $1 at compound interest.​

Quizplus · Accepted Answer

The Answer of Norton Company is considering a closed-loop geothermal heat pump to replace its existing heating system. The project will require an initial investment of $750,000 and will return $200,000 each year for five years.
(a) If taxes are ignored and the required rate of return is 9%, what is the project's net present value?
(b) Based on this analysis, should Norton Company proceed with the project?Below is a table for the present value of $1 at compound interest.​​  Below is a table for the present value of an annuity of $1 at compound interest.​

Norton Company Is Considering a Closed-Loop Geothermal Heat Pump to Replace