Response to the following :
Discounting Cash Inflows
Refer to the data in problem. The company expects the new investment will generate revenues of $24,000 per year for the five years of the investment's life. At the end of the four years, the company expects the investment to have a salvage value of $20,000. What is the present value of cash inflows related to this investment? Should the company make this investment?
Problem:
Discounting Cash Outflows
The company is deciding whether to invest in a certain capital investment. The investment requires an initial outlay of $55,000 and annual payments of $12,000 made at the end of the year for five years. The company's discount rate is 14%.
What is the present value of cash outflows related to this investment?