The Finney Company Is Reviewing the Possibility of Remodelling One

The Finney Company is reviewing the possibility of remodelling one of its showrooms and buying some new equipment to improve sales operations. The remodelling would cost $120,000 now, and the useful life of the project is ten years. Additional working capital needed immediately for this project would be $30,000; the working capital would be released for use elsewhere at the end of the ten-year period. The equipment and other materials used in the project would have a salvage value of $10,000 in ten years. Finney's discount rate is 16%. (Ignore income taxes in this problem.)
-What would the annual net cash inflows from this project have to be in order to justify investing in remodelling?

A) $14,495.
B) $16,147.
C) $29,158.
D) $35,842.

Correct Answer:

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