ABC Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Florida at the cost of $1,830,000. Under the other proposal, the company would focus on Buffalo and open 6 stores at a cost of $2,400,000. The following information is available:

Florida proposal Buffalo proposal

Required investment $1,830,000 $2,400,000

Estimated life 8 years 8 years

Estimated residual life $50,000 $40,000

Estimated annual cash inflows over the next 8 years $200,000 $900,000

Required rate of return 10% 10%

 

What is the net present value of the Buffalo proposal is closest ?

Answer rating: 100% (QA)

Answer To calculate the net present value NPV of the Buffalo proposal we need ... View the full answer