Question: Net Present Value Analysis with Multiple Investments, Alternative Format. Luxury Transportation LLC would like to purchase several limousines at a cost of $260,000. Additional equipment

Net Present Value Analysis with Multiple Investments, Alternative Format. Luxury Transportation LLC would like to purchase several limousines at a cost of $260,000. Additional equipment needed to maintain the limousines will be purchased at the end of year 2 for $40,000. The limousines are expected to have a life of 8 years, and a salvage value of $20,000. Annual costs for maintenance, insurance, and other cash expenses will total $42,000. Annual net cash receipts resulting from this purchase are predicted to be $135,000. The companys required rate of return is 14 percent.

Required: Find the net present value of this investment using the format presented in Figure 6.4. Should the company purchase the limousines? Explain. Please show work!

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