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Calculate the net present value of this investment

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Reference no: EM131782268

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 $45,000 and is expected to last 8 years. However, the minivan's engine will need to be overhauled at a cost of $4,000 at the end of year 3. In addition, purchasing the minivan would require an immediate investment of $20,000 in working capital which would be released for investment elsewhere at the end of the 8 years. The minivan is expected to have a $10,000 salvage value at the end of 8 years. This delivery service is expected to generate net cash inflows of $20,000 per year in each of the 8 years. Apnea's cost of capital is 15%.

Calculate the net present value (NPV) of this investment opportunity. Do not use decimals in your answer.

Reference no: EM131782268

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