ABC Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Florida
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Question:
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 ?
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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