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Bradley Corporation's required rate of return is 14 %. The company has an opportunity to be the exclusive distributor of a very popular consumer item. No new equipment would be needed, but the company would have to use one-fourth of the space in a warehouse it owns. The warehouse cost $235,000 new. The warehouse is currently half-empty and there are no other plans to use the empty space. In addition, the company would have to invest $107,000 in working capital to carry inventories and accounts receivable for the new product line. The company would have the distributorship for only 5 years. The distributorship would generate a $24,000 annual net cash inflow. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: What is the net present value of the project? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.

Bradley Corporation's required rate of return is 14 %. The company has an opportunity to be the exclusive distributor of a very popular consumer item. No new equipment would be needed, but the company would have to use one-fourth of the space in a warehouse it owns. The warehouse cost $235,000 new. The warehouse is currently half-empty and there are no other plans to use the empty space. In addition, the company would have to invest $107,000 in working capital to carry inventories and accounts receivable for the new product line. The company would have the distributorship for only 5 years. The distributorship would generate a $24,000 annual net cash inflow. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: What is the net present value of the project? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.

Essentials Of Investments
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
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Bradley Corporation's required rate of return is 14 %. The company has an opportunity to be the exclusive distributor of a very popular consumer item. No new equipment would be needed, but the company would have to use one - fourth of the space in a warehouse it owns. The warehouse cost $235, 000 new. The warehouse is currently half - empty and there are no other plans to use the empty space. In addition, the company would have to invest $107,000 in working capital to carry inventories and accounts receivable for the new product line. The company would have the distributorship for only 5 years. The distributorship would generate a $24,000 annual net cash inflow. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: What is the net present value of the project? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.
Transcribed Image Text:Bradley Corporation's required rate of return is 14 %. The company has an opportunity to be the exclusive distributor of a very popular consumer item. No new equipment would be needed, but the company would have to use one - fourth of the space in a warehouse it owns. The warehouse cost $235, 000 new. The warehouse is currently half - empty and there are no other plans to use the empty space. In addition, the company would have to invest $107,000 in working capital to carry inventories and accounts receivable for the new product line. The company would have the distributorship for only 5 years. The distributorship would generate a $24,000 annual net cash inflow. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: What is the net present value of the project? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.
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