Dickerson Co The Company's Minimum Desired Rate of Return Is 12

question 133

Essay

Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: $$\begin{array} { c c c } \text { Year } & \text { Net Income } & \text { Net Cash Flow } \\1 & \$ 75,000 & \$ 280,000 \\2 & 100,000 & 300,000 \\3 & 109,000 & 200,000 \\4 & 36,000 & 120,000 \\& \$ 320,000 & \$ 900,000\end{array}$$ The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine the net present value.

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