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 8%. The patent is expected to generate the following amounts of annual income and cash flows: Year 1Year 2Year 3Year 4Net income$5,100$6,500$6,300$3,000Operating cash flows17,05018,25018,20015,100(Click here to see present value and future value tables)A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar.$fill in the blank 1B. What happens if the required rate of return increases?If the required rate of return increases, the NPV will be lower . 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 8%.The patent is expected to generate the following amounts of annual income and cash flows:Year 1Year 2Year 3Year 4Net income$5,100$6,500$6,300$3,000Operating cash flows17,05018,25018,20015,100(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.B. What happens if the required rate of return increases?If the required rate of return increases, the NPV will be lower v

Net Present Value(NPV) is excess of PV of inflows over PV of outflows related to investment proposal…

Answered: Falkland, Inc., is considering the…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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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 8%. 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	17,050	18,250	18,200	15,100

(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, the NPV will be lower .

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 8%.
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
17,050
18,250
18,200
15,100
(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.
B. What happens if the required rate of return increases?
If the required rate of return increases, the NPV will be lower v

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