BWP, Inc., is considering the purchase of an asset. BWP€™s required rate of return on new assets is 12%. The expected net cash inflows generated by the new asset are as follows:

Required
Given that the net cash inflows can be realized, what is the maximum amount BWP should be willing to pay for the new asset? Assume that each cash inflow occurs at the end of the year. (Contributed by Norma C.Powell)

Transcribed Image Text:

Years 1-4 5-9 10 10 Nature of the Cash Inflows Amount $3,000 2,500 2,000 1,000 Net operating revenues Net operating revenues Net operating revenues Sale of asset