Calculate the net present value of this investment

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Question - 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 $95,000 and is expected to last 10years. However, the minivan's engine will need to be overhauled at a cost of $5,000 at the end of year 3. In addition, purchasing this minivan would require an immediate investment of $15,000 in working capital which would be released for investment elsewhere at the end of the10 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 $20,000 per year in each of the10 years. Apnea's cost of capital is 8%.

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

You will need to use the time value of money factors posted on car men to answer this question. No credit will be awarded for this question using a means other than these table factors to answer this question.

Reference no: EM132076037

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