19,000, would have a useful life o at the investment has been in ope 11 years (including the year just c raluate the success of the project. e number eg -45 or parentheses eg aces as displayed in the factor table

Managerial Accounting: The Cornerstone of Business Decision-Making
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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter12: Capital Investment Decisions
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Bonita Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost
$249,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $45,800 per year. Now
that the investment has been in operation for 1 year, revised figures indicate that it actually cost $260,000, will have a total useful life
of 11 years (including the year just completed), and will produce net annual cash flows of $39.200 per year. Click here to view PV table.
Evaluate the success of the project. Assume a discount rate of 10%. (If the net present value is negative, use either a negative sign preceding
the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, eg. 125. For calculation purposes, use 5 decimal
places as displayed in the factor table provided.)
Original estimate net present value
24
Revised estimate net present value
%24
The project
a success.
Transcribed Image Text:Bonita Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $249,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $45,800 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $260,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $39.200 per year. Click here to view PV table. Evaluate the success of the project. Assume a discount rate of 10%. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to O decimal places, eg. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Original estimate net present value 24 Revised estimate net present value %24 The project a success.
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