Question: Exercise 10-5A (Algo) Determining net present value LO 10-2 Stuart Company is considering investing in two new vans that are expected to generate combined cash

 Exercise 10-5A (Algo) Determining net present value LO 10-2 Stuart Company

Exercise 10-5A (Algo) Determining net present value LO 10-2 Stuart Company is considering investing in two new vans that are expected to generate combined cash inflows of $33,500 per year. The vans' combined purchase price is $95,000. The expected life and salvage value of each are eight years and $20,800, respectively. Stuart has an average cost of capital of 10 percent. (PV of $1 and PVA of S1) (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 Net present value b. W the return be above or below the cost of capital? Should the investment opportunity be accepted

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