Partida Inc. has provided the following data concerning a proposed investment project:
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Initial investment
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$861,000
|
|
Annual cash receipts
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$603,000
|
|
Life of the project
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5 years
|
|
Annual cash expenses
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$332,000
|
|
Salvage value
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$129,000
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The company's tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 3 years. The company uses a discount rate of 11%.
Required:
Compute the net present value of the project.