5. Forise Water Company drills small commercial water wells. The company is in the process...
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5. Forise Water Company drills small commercial water wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below. Initial investment: Asset $600,000 Working capital $ 128,000 Operations (per year for four years): Cash receipts $450,000 Cash expenditures $ 190,000 Disinvestment: Salvage value of drill (existing) $ 50,000 Discount rate 18% What is the net present value of the investment? Assume there is no recovery of working capital. A) $(124,280) B) $21,400 C) $82,724 D) $149,400
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