Sheridan, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing...

 

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Sheridan, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Sheridan currently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Sheridan $44160 per year. The building will cost Sheridan $414000. Sheridan will depreciate the building for 20 years. At the end of 20 years, the building will have a $115000 salvage value. Sheridan's required rate of return is 10%. Using the present value tables, the building's net present value is (round to the nearest dollar) Sheridan, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Sheridan currently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Sheridan $44160 per year. The building will cost Sheridan $414000. Sheridan will depreciate the building for 20 years. At the end of 20 years, the building will have a $115000 salvage value. Sheridan's required rate of return is 10%. Using the present value tables, the building's net present value is (round to the nearest dollar)

Answer rating: 100% (QA)

To calculate the net present value NPV of the building purchase we need to find the pres... View the full answer