Net present value of the investment opportunity

Reference no: EM13148301

Lake Shuttle Inc. is considering investing in two new vans that are expected to generate combined cash inflows of $20,000 per year. The vans combined purchase price is $65,000. The expected life and salvage value of each are four years and $15,000, respectively. Lake Shuttle Inc. has an average cost of capital of 14%.

a. Calculate the net present value of the investment opportunity.

b. Indicate whether the investment opportunity is expected to earn a return that is above of below the cost of capital and whether is should be accepted.

Reference no: EM13148301

Questions Cloud

Find probability that better walks is on the fourth pitch : That successive pitches are independent of oneanother. Knowing this, the opposing team manager has instructed his hitters to not swing at anything. The better walks on the fourth pitch.

Which type of succession takes longer : Which type of succession takes longer? a) primary succession or b) secondary succession?

Draw a structure for a compound that meets description : Draw a structure for a compound that meets the following description: A compound C3H5N with an IR absorption at 2215 cm-1 but none at 3300 cm-1

What was the amount of the equal annual end-of-year payments : What was the amount of the equal annual end-of-year payments for each of ?rst 3 years? b. What was the amount of the equal annual end-of-year for each of the last 3 years?

Net present value of the investment opportunity : Calculate the net present value of the investment opportunity. Indicate whether the investment opportunity is expected to earn a return that is above of below the cost of capital and whether is should be accepted.

Why do most organisms today have genes made of dna : If the first genes were made of RNA, why do most organisms today have genes made of DNA?

Prepare an income statement-variable costing : Prepare an income statement for this current year using the variable costing income statement.

Find rue mean if intake is normal with a variance of value : What sample size is needed to estimate with 95 persent confidence the mean intake of calcium within 20 units of the true mean if the intake is normal with a variance of 1900 units?

calculate the social welfare loss : How much profit does the monopolist earn? How much consumer surplus is left? (if any) Calculate the social welfare loss.

User Account

All Pages