Burry Inc. has provided the following data to be used in evaluating a proposed investment project:
Initial investment $620,000
Annual cash receipts $552,000
Life of the project 7 years
Annual cash expenses $325,000
Salvage value $60,000
Tax rate 40%
For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 4 years. The company uses a discount rate of 12%.
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
The net present value of the project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answer to the nearest dollar amount.)
See attached images if needed.
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