Callaghan Company is considering investing in two new vans that are expected to generate combined cash inflows

Question:

Callaghan Company is considering investing in two new vans that are expected to generate combined cash inflows of $28,000 per year. The vans’ combined purchase price is $91,000. The expected life and of each are four years and $21,000, respectively. Callaghan has an average of 7 percent.

Required
Round your figures to two decimal points.
a. Calculate the of the investment opportunity.
b. Indicate whether the investment opportunity is expected to earn a return that is above or below the and whether it should be accepted.

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