Impact in the change of the company value

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SamSan is considering two alternative busses to transport people from the commuter lot to the main campus. Bus A has a cost of P100,000 and will produce end-of-year net cash flows of P50,000 per year for 3 years. Bus V will cost P150,000 and will produce cash flows of P64,000 per year for 6 years. The company must provide bus service for 6 years after which it plans to give up its franchise and to cease operating the route. Inflation is not expected to affect either costs or revenues during the next 6 years. If SamSan's cost of capital is 15%, calculate the amount that the better project will impact in the change of the company's value.

Reference no: EM133113955

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