Answer Happy

Murray, Inc., has assembled the estimates shown below relating
to a proposed new product. These estimates are based on a 5-year
project life. At the end of the project, the new equipment
would be sold, the working capital would be available for other
uses in the company, and the product would be discontinued. Murray
uses a discount rate of 10%. (Ignore income taxes.)
Annual cash sales
$
675,000
Annual out-of-pocket cash expenses
$
510,000
Annual depreciation on new equipment
$
78,000
Initial cost of new equipment (at beginning)
$
450,000
Salvage value of equipment at the end of 5 years
$
75,000
Working capital requirement (at beginning, then returned at
end)
$
90,000
Choose from among these PVIFs only:
3.791 Present Value of an Ordinary Annuity of $1 at 5
years, 10%
0.909 Present Value of $1 at 1 year, 10%
0.826 Present Value of $1 at 2 years, 10%
0.751 Present Value of $1 at 3 years, 10%
0.683 Present Value of $1 at 4 years, 10%
0.621 Present Value of $1 at 5 years, 10%
The following are each of the elements of the Net Present Value
(NPV) of this project. For each element, use parentheses
() for cash outflows, positive numbers for cash inflows,
but nocommas (,), extra spaces, or dollar
signs ($), and compute the following: