- Campbell Manufacturing is considering the purchase of a new
welding system. The cash benefits will be $480,000 per year. The
system costs $2,350,000 and will last 10 years.
- Evee Cardenas is interested in investing in a women's specialty
shop. The cost of the investment is $330,000. She estimates that
the return from owning her own shop will be $45,000 per year. She
estimates that the shop will have a useful life of 6 years.
- Barker Company calculated the NPV of a project and found it to
be $63,900. The project's life was estimated to be 8 years. The
required rate of return used for the NPV calculation was 10%. The
project was expected to produce annual after-tax cash flows of
$135,000.
Compute the NPV for Campbell Manufacturing, assuming a discount
rate of 12%. If required, round all present value calculations to
the nearest dollar. Use the minus sign to indicate a negative
NPV.