Benson Company is considering investing in two new vans that are expected to generate combined...
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Accounting
Benson Company is considering investing in two new vans that are expected to generate combined cash inflows of $ per year. The vans' combined purchase price is $ The expected life and salvage value of each are eight years and $ respectively. Benson has an average cost of capital of percent. PV of $ and PVA of $
Note: Use appropriate factors from the tables provided.
Required
a Calculate the net present value of the investment opportunity.
Note: Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to decimal places.
b Indicate whether the investment opportunity is expected to earn a return that is above or below the cost of capital and whether it should be accepted.
a Net present value
b Will the return be above or below the cost of capital?
b Should the investment opportunity be accepted?
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