Does the project turn out as successful as predicted

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Reference no: EM132775633

Martelle Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $230,000, would have a useful life of nine years and zero salvage value, and would result in net annual cash flows of $45,900 per year. Now that the investment has been in operation for one year, revised figures indicate that it actually cost $234,000, will have a useful life of 11 years, and will produce net annual cash flows of $38,700 per year. Assume a discount rate of 12%.

Problem 1: Calculate

Original net present value$
Revised net present value$

Problem 2: Does the project turn out as successful as predicted?

Reference no: EM132775633

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