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Basic Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales minus cash operating expenses)
Basic Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales minus cash operating expenses) arising from the rebuilding and sale of the used alternators would be as follows (numbers in parentheses indicate an outflow): 10 Year 1 Year 11 Year 12 $90,000 ($20,000) $100,000 In addition to the above net operating cash flows, Basic Company would purchase production equipment costing $200,000 now to use in the rebuilding of the alternators. The equipment would have a 12-year life and a $15,000 salvage value. The company's discount rate is 10%. (Ignore income taxes in this problem.) What is the present value of the net operating cash flows (sales minus cash operating expenses) arising from the rebuilding and sale of the alternators, rounded to the nearest dollar? (Do not round your intermediate calculations.) What is the net present value of ALL cash flows associated with this investment, rounded to the nearest dollar? (Do not round your intermediate calculations.)
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