Exercise 10-5A (Algo) Determining net present value LO 10-2 Campbell Company is considering investing in two new vans that are expected to generate combined cash inflows of $25,000 per year. The vans combined purchase price is $93,500. The expected life and salvage value of each are seven years and $20,100, respectively. Campbell has an average cost of capital of 12 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 whether it should be accepted Answer is complete but not entirely correct. Not present value Will the return be above or below the cost of capital? Should the investment opportunity be accepted? $ 29,686,00 Above Accepted Exercise 10-8A (Algo) Determining the cash flow annuity with income tax considerations LO 10-2 To open a new store, Gibson Tire Company plans to invest $295,000 in equipment expected to have a five-year useful life and no salvage value. Gibson expects the new store to generate annual cash revenues of $325,000 and to incur annual cash operating expenses of $185,000. Gibson's average income tax rate is 30 percent. The company uses straight-line depreciation Required Determine the expected annual net cash inflow from operations for each of the first four years after Gibson opens the new store. (Negative amounts should be indicated by a minus sign.) Answer is complete but not entirely correct. Net cash Inflow/ Outflow Year 1 ls 17,500 $ Outflow Year 2 $ 17,500 x Inflow Year 3 $ 117,500 Inflow Year 4 S 17,500 3 Inflow OOO