Calculate the net present value (NPV) of the project.

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...
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Benson Designs has prepared the following estimates for a long-term project it
is considering. The initial investment is $22,250, and the project is expected to yield after-tax cash
inflows
of $8,000 per year for 4 years. The firm has a 10% cost of capital.
(a) Calculate the net present value (NPV) of the project.
(b) Determine whether the internal rate of return (IRR) for the project is GREATER than 11%. Show
necessary calculations.
(c) Would you recommend that the firm accept the project based on the NPV (answer in 10 words)?
(d) Determine the payback period for the project.

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