(b) Your answer has been saved. See score details after the due date. Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 0 decimal places, e.g. 5,275.) Net present value Should the van be purchased? Van should (c) $ be purchased. Save for Later 1084 Determine how much the additional benefits would have to be worth in order for the van to be purchased. Additional benefits would need to have a total present value of at least $ Attempts: 1 of 1 used Attempts: 0 of 1 used Submit Answer
(b) Your answer has been saved. See score details after the due date. Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 0 decimal places, e.g. 5,275.) Net present value Should the van be purchased? Van should (c) $ be purchased. Save for Later 1084 Determine how much the additional benefits would have to be worth in order for the van to be purchased. Additional benefits would need to have a total present value of at least $ Attempts: 1 of 1 used Attempts: 0 of 1 used Submit Answer
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Angela's Pet Shop is considering the purchase of a new delivery van. Angela Smith, owner of the shop, has compiled the following
estimates in trying to determine whether the delivery van should be purchased:
Cost of the van
Annual net cash flows
Salvage value
Estimated useful life
Cost of capital
Present value of an annuity of 1
Present value of 1
Click here to view PV tables.
(a)
Net present value
Angela's assistant manager is trying to convince Angela that the van has other benefits that she hasn't considered in the initial
estimates. These additional benefits, including the free advertising the store's name painted on the van's doors will provide, are
expected to increase net cash flows by $500 each year.
$40,100
Should the van be purchased?
Van
6,800
$
should not
4,800
Your answer has been saved. See score details after the due date.
8 years
10%
Calculate the net present value of the van, based on the initial estimates. (Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table
provided. Round answer to O decimal places, e.g. 5,275.)
5.33493
0.46651
✓ be purchased.
-1583
Attempts: 1 of 1 used
Transcribed Image Text:(b)
Your answer has been saved. See score details after the due date.
Calculate the net present value, incorporating the additional benefits suggested by the assistant manager. (For calculation
purposes, use 5 decimal places as displayed in the factor table provided. Round answer to O decimal places, e.g. 5,275.)
(c)
Net present value $
Should the van be purchased?
Van should
be purchased.
1084
Determine how much the additional benefits would have to be worth in order for the van to be purchased.
Save for Later
Additional benefits would need to have a total present value of at least $
Attempts: 1 of 1 used
Attempts: 0 of 1 used Submit Answer
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