Question: Please show full work if possible, would like to be able to understand the problem and solution. Leo company is considering a new venture in

Please show full work if possible, would like to be able to understand the problem and solution.

Leo company is considering a new venture in office equipment. It expects the cost of

acquisition of land and building to be $100,000. Leo company expects cash flows to be $40,000

the first year and $45,000 for the next 4 years. It will discontinue the furniture operation upon

the completions of the 5th year. Assume no salvage value. The companys WACC is 10%.

6. What is Leo companys NPV and should they accept or reject the project? Assume no other

projects exist and that NPV should be used to make the decision.

A. $75,120; accept project

B. $66,040; accept project

C. $80,230; accept project

D. $(8,090); reject project

E. $(9,324); reject project

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