Apnea video rental store is considering the purchase of an

Reference no: EM13576689

Apnea Video Rental Store is considering the purchase of an almost new minivan to deliver and pick up video tapes from customers. The minivan will cost $125,000 and is expected to last 10 years. In addition, purchasing this minivan would require an immediate investment of $60,000 in working capital which would be released for investment elsewhere at the end of the 10 years. The minivan is expected to have a $10,000 salvage value at the end of 10 years. This delivery service is expected to generate net cash inflows of $50,000 per year in each of the 10 years. However, the minivan is expected to need an overhaul costing $20,000 at the end of the sixth year. Apnea has a cost of capital of 10% and an income tax rate of 40%. Calculate the net present value (NPV) of this investment opportunity.

Reference no: EM13576689

Questions Cloud

X company manufactures a single product and estimates its : x company manufactures a single product and estimates its direct manufacturing costs each month. it is estimated that

Balfour corporation acquired 100 of tobac inc a foreign : balfour corporation acquired 100 of tobac inc. a foreign corporation for 33000000 fc. the acquisition which was

If maintenance hours in october are expected to be 3550 : x company uses the high-low method to predict maintenance costs each month with maintenance hours as the activity

If revenue and cost relationships are not expected to : in 2013 x company had revenue of 198000 and incurred the following costsdirect materials37620direct labor all

Apnea video rental store is considering the purchase of an : apnea video rental store is considering the purchase of an almost new minivan to deliver and pick up video tapes from

At the acquisition date sams total fair value including the : father inc. buys 80 percent of the outstanding common stock of sam corporation on january 1 2013 for 760960 cash. at

Alpaca corporation had revenues of 300000 in its first year : alpaca corporation had revenues of 300000 in its first year of operations. the company has not collected on 19900 of

On january 1 2004 liberty co entered into a 12- year lease : on january 1 2004 liberty co entered into a 12- year lease on building. the lease contract requires 1 annual prepaid

Seard clinic uses patient-visits as its measure of activity : seard clinic uses patient-visits as its measure of activity. the clinic has provided the following reportrequirements

User Account

All Pages