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Compute the net present value of the project

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Reference no: EM132934941

Question - Hawke Skateboards is considering building a new plant. Bob Skerritt, the company's marketing manager, is an enthusiastic supporter of the new plant. Lucy Liu, the company's chief financial officer, is not so sure that the plant is a good idea. Currently, the company purchases its skateboards from foreign manufacturers. The following figures were estimated regarding the construction of a new plant.

Cost of plant $4,080,000

Estimated useful life 15 years

Annual cash inflows 4,080,000

Salvage value $2,040,000

Annual cash outflows 3,611,000

Discount rate 11%

Required - Compute the net present value of the project based on the original projections.

Reference no: EM132934941

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