Folk Landscaping is evaluating an offer to purchase Bruce Lawn Care, its main competitor, for \($250,000.00.\) An accountant has projected that the purchase will increase Folk’s annual net cash flow by \($30,000.00.\) Folk wants its investment to earn a 15% rate of return.

Instructions:

1. Calculate the net present value of the purchase, assuming the \($30,000.00\) net cash flow will occur for 25 years.

2. Calculate the net present value of the purchase, assuming the \($30,000.00\) net cash flow will occur for 30 years.

3. Should Folk Landscaping purchase Bruce Lawn Care?

4. Management has asked you to evaluate the investment for 35 and 40 years. Do you believe these calculations will change the decision?