$4$

Rundle Company is considering investing in two new vans that are expected to generate combined cash inflows of $$28,000$ per year. The vans' combined purchase price is $$92,500.$ The expected life and salvage value of each are seven years and $$21,100,$ respectively. Rundle has an average cost of capital of $14$ percent. $($PV of $$1$ and PVA of $$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Required

a$.$ Calculate the net present value of the investment opportunity. $($Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to $2$ decimal places.$)$

b$.$ Indicate whether the investment opportunity is expected to earn a return that is above or below the cost of capital and thether it should be accepted.

Answer is complete but not entirely correct.

$\backslash$table$[[$a$.,$Net present value,$$28,582\mathrm{.}04$