Problem - Pickleball Company is considering the following investment proposal:
Initial investment:
Depreciable assets (straight-line) $72,000
Working capital 8,000
Operations (per year for 4 years):
Cash receipts $50,000
Cash expenditures 22,000
Disinvestment:
Salvage value of equipment $6,000
Recovery of working capital 8,000
Discount rate: 10 percent
Additional information for interest rate of 10 percent and four time periods:
Present value of $1 - 0.683
Present value of an annuity of $1 - 3.170
What is the net present value for the investment?
A. $ 5,256
B. $18,322
C. $65,256
D. $57,060