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Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 12%. The patent is expected to generate the following amounts of annual income and cash flows:   Year 1 Year 2 Year 3 Year 4 Net income $5,100 $6,500 $6,300 $3,000 Operating cash flows 16,800 18,500 18,200 14,750(Click here to see present value and future value tables) A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar. $fill in the blank 1 B. What happens if the required rate of return increases? If the required rate of return increases,

Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 12%. The patent is expected to generate the following amounts of annual income and cash flows:   Year 1 Year 2 Year 3 Year 4 Net income $5,100 $6,500 $6,300 $3,000 Operating cash flows 16,800 18,500 18,200 14,750(Click here to see present value and future value tables) A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar. $fill in the blank 1 B. What happens if the required rate of return increases? If the required rate of return increases,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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    Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 12%. The patent is expected to generate the following amounts of annual income and cash flows:

      Year 1 Year 2 Year 3 Year 4
    Net income $5,100 $6,500 $6,300 $3,000
    Operating cash flows 16,800 18,500 18,200 14,750
    (Click here to see present value and future value tables)

    A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar.

    $fill in the blank 1

    B. What happens if the required rate of return increases?

    If the required rate of return increases, 

     

    .

     

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