Fantastic Flooring (FF) is a carpet wholesale company. FF is considering building a new inventory...
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Fantastic Flooring (FF) is a carpet wholesale company. FF is considering building a new inventory warehouse for $400,000. The warehouse would allow FF to increase their pre-tax cash flows by $50,000 each year. The company would plan to use the warehouse for 20 years before selling it for $200,000. The company uses straight-line depreciation. FFs tax rate is 30%, and the required rate of return is 10%. What is the Excess Present Value Index of the proposed investment (rounded to 4 decimal places)?
A) .3542 B) .5000 C) .7552 D) .8331 E) .9250
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