Perez 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 six years and $ respectively. Perez 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.
tablea Net present value,,b Will the return be above or below the cost of capital?,,b Should the investment opportunity be accepted?,,
