Linda has been working with a small travel agency for the past few years to learn...

 

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Linda has been working with a small travel agency for the past few years to learn the business and to better understand what costs are necessary to run it. Now, having been in the business world for a few years, she's ready to start her own travel agency, specializing in "off the grid" locations. She knows there will be both overhead costs and labor costs, since she intends to hire one assistant. The following chart outlines her estimates thus far. Annual net operating cash flowsa Initial asset investment Asset life in years Salvage value of asset at end of useful life Tax rate $3,900 $9,800 8 $900 25% a After assistant and overhead costs, but does not include a salary for Linda. As a new business owner, Linda only expects to earn a 5% rate of return. She conducted an initial NPV anlaysis for an 8-year interval, recognizing that she'll make some significant adjustments after that point. Her initial analysis revealed a positive NPV. Rerun the NPV analysis for Linda. Did she correctly determine a positive NPV related to her investment for this 8-year period? State the NPV amount. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) NPV $ Linda's calculations were Linda has been working with a small travel agency for the past few years to learn the business and to better understand what costs are necessary to run it. Now, having been in the business world for a few years, she's ready to start her own travel agency, specializing in "off the grid" locations. She knows there will be both overhead costs and labor costs, since she intends to hire one assistant. The following chart outlines her estimates thus far. Annual net operating cash flowsa Initial asset investment Asset life in years Salvage value of asset at end of useful life Tax rate $3,900 $9,800 8 $900 25% a After assistant and overhead costs, but does not include a salary for Linda. As a new business owner, Linda only expects to earn a 5% rate of return. She conducted an initial NPV anlaysis for an 8-year interval, recognizing that she'll make some significant adjustments after that point. Her initial analysis revealed a positive NPV. Rerun the NPV analysis for Linda. Did she correctly determine a positive NPV related to her investment for this 8-year period? State the NPV amount. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) NPV $ Linda's calculations were

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