Exercise 16-5 Determining net present value LO 16-2

Callaghan Company is considering investing in two new vans that are expected to generate combined cash inflows of $27,000 per year. The vans combined purchase price is $94,500. The expected life and salvage value of each are six years and $21,900, respectively. Callaghan has an average cost of capital of 10 percent. (PV of $1 and PVA of $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 intermediate calculations and final answer to 2 decimal places.) Net present value _________________________