Exercise $16-5$A $($Algo$)$ Determining net present value LO $16-2$

Baird Company is considering investing in two new vans that are expected to generate combined cash inflows of $\backslash$$$29,000$ per year. The vans' combined purchase price is $\backslash (\backslash$$ $100,000\backslash ).$ The expected life and salvage value of each are eight years and $\backslash (\backslash$$ $21,700\backslash ),$ respectively. Baird has an average cost of capital of $12$ percent. $($PV of $\backslash$$$1$ and PVA of $\backslash$$$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required

a$.$ Calculate the net present value of the investment opportunity. $($Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to $2$ decimal places.$)$

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

Answer is complete but not entirely correct. Exercise $16-5$A $($Algo$)$ Determining net present value LO $16-2$

Baird Company is considering investing in two new vans that are expected to generate combined cash inflows of $\backslash$$$29,000$ per year. The vans' combined purchase price is $\backslash (\backslash$$ $100,000\backslash ).$ The expected life and salvage value of each are eight years and $\backslash (\backslash$$ $21,700\backslash ),$ respectively. Baird has an average cost of capital of $12$ percent. $($PV of $\backslash$$$1$ and PVA of $\backslash$$$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required

a$.$ Calculate the net present value of the investment opportunity. $($Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to $2$ decimal places.$)$

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

Answer is complete but not entirely correct.