Quillen Company is performing a post-audit of a project completed one year ago. The initial estimates were that
the project would cost $227,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $43,700 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $231,000, will have a total useful life of 11 years (including the year just completed), and will produce net annual cash flows of $36,300 per year. Click here to view PV table.
Evaluate the success of the project. Assume a discount rate of 11%. (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 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
1)Original estimate net present value