Norton Company Is Considering a Project That Will Require an Initial

Norton Company is considering a project that will require an initial investment of $750,000 and will return $200,000 each year for 5- years.
a) If taxes are ignored and the required rate of return is 9%, what is the project's net present value?
b) Based on this analysis, should Norton Company proceed with the project?
Below is a table for the present value of $1 at compound interest. $$\begin{array} { l l l l } \text { Year } & 9 \% & \text { Year } & 9 \% \\\hline 1 & 0.917 & 6 & 0.596 \\2 & 0.842 & 7 & 0.547 \\3 & 0.772 & 8 & 0.502 \\4 & 0.708 & 9 & 0.460 \\5 & 0.650 & 10 & 0.422\end{array}$$ Below is a table for the present value of an annuity of $1 at compound interest. $$\begin{array} { l l l l } \text { Year } & 9 \% & \text { Year } & 9 \% \\\hline 1 & 0.917 & 6 & 4.486 \\2 & 1.759 & 7 & 5.033 \\3 & 2.531 & 8 & 5.535 \\4 & 3.240 & 9 & 5.995 \\5 & 3.890 & 10 & 6.418\end{array}$$

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a) $200,000 × 3.89) - $750,000...

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