Considering investing in project-requires initial investment

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Reference no: EM131163194

A company is considering investing in a project that requires an initial investment of $75,000. The operating and maintenance costs are expected to be $5,000 per year for the first 5 years and then increase by $500 every year for the next five years. The revenues are expected to be $5,000 for the first year and then increase by 5% per year for the 10 year life of the project. The salvage value at the end of 10 years is expected to be $10,000. If the MARR is 12% per year compounded yearly, should the company invest in this project?

Reference no: EM131163194

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