Question
Carla Vista, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Carla Vistacurrently warehouses its inventory in a
Carla Vista, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Carla Vistacurrently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Carla Vista $56640 per year. The building will cost Carla Vista $531000. Carla Vista will depreciate the building for 20 years. At the end of 20 years, the building will have a $147500 salvage value. Carla Vistas required rate of return is 10%. Using the present value tables, the buildings net present value is (round to the nearest dollar)
$-26871.
$504129.
$-7850.
$1132800.
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