Brief Exercise 16-2 (Static) Determining net present value LO 16-2 Eagle Transport Company is considering investing in two new planes that are expected to generate combined cash inflows of $250,000 per year. The planes' combined purchase price is $1,700,000. The expected life and salvage value of each plane are 10 years and $50,000, respectively. Eagle Transport has an average cost of capital of 5 percent. (PV of $1 and PVA of $1) Required: Calculate the net present value of the investment opportunity. Note: Round your intermediate calculations and final answer to 2 decimal places. Use appropriate factor(s) from the tables provided. Future cash inflows Salvage values Total Cost of investment Net present value Present value 0.00
Brief Exercise 16-2 (Static) Determining net present value LO 16-2 Eagle Transport Company is considering investing in two new planes that are expected to generate combined cash inflows of $250,000 per year. The planes' combined purchase price is $1,700,000. The expected life and salvage value of each plane are 10 years and $50,000, respectively. Eagle Transport has an average cost of capital of 5 percent. (PV of $1 and PVA of $1) Required: Calculate the net present value of the investment opportunity. Note: Round your intermediate calculations and final answer to 2 decimal places. Use appropriate factor(s) from the tables provided. Future cash inflows Salvage values Total Cost of investment Net present value Present value 0.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Brief Exercise 16-2 (Static) Determining net present value LO 16-2
Eagle Transport Company is considering investing in two new planes that are expected to generate combined cash inflows of
$250,000 per year. The planes' combined purchase price is $1,700,000. The expected life and salvage value of each plane are 10
years and $50,000, respectively. Eagle Transport has an average cost of capital of 5 percent. (PV of $1 and PVA of $1)
Required:
Calculate the net present value of the investment opportunity.
Note: Round your intermediate calculations and final answer to 2 decimal places. Use appropriate factor(s) from the tables
provided.
Future cash inflows
Salvage values
Total
Cost of investment
Net present value
Present value
0.00
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