The Horizon Company will invest $52,000 in a temporary projectthat will generate the following cash inflows for the next threeyears. Use Appendix B for an approximate answer but calculate yourfinal answer using the formula and financial calculatormethods.
| Year | Cash Flow |
| 1 | | $ | 17,000 | |
| 2 | | | 32,000 | |
| 3 | | | 22,000 | |
|
The firm will also be required to spend $11,000 to close downthe project at the end of the three years.
a. Compute the net present value if the cost ofcapital is 9 percent. (Negative amount should be indicatedby a minus sign. Do not round intermediate calculations and roundyour answer to 2 decimal places.)
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b. Should the investment be undertaken?
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