Sam is considering a new business venture operating a carrier business. He can buy a van for $60,000 including taxes. He expects it will generate annual revenue of $25,000 for the next 5 years. The annual operating costs are estimated to be $9,000. The salvage value is estimated to be $6,000 at the end of 5 years. He wants to earn at least 18%/year. Assume expenses occur at the beginning of each year and revenue at the end of each year. Calculate the NPV. Should he buy the van? Explain why or why not. 

Answer rating: 100% (QA)

To calculate the Net Present Value NPV well use the formula NPV sumt1n Rt Ct1rt Initial Cost Where R... View the full answer