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Hi-Town Nursery is considering the purchase of a new greenhouse. The greenhouse will have an initial cost of $20,000 and an estimated salvage value of
Hi-Town Nursery is considering the purchase of a new greenhouse. The greenhouse will have an initial cost of $20,000 and an estimated salvage value of $3,000 at the end of its useful life. The nursery expects annual net operating cash inflows to increase $5,000 each year for ten years. The cost of capital is 8 percent.
Required:
A)Compute the net present value of the new greenhouse. (Ignore income taxes)
B)What is the payback period?
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