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LakeFront Co. is considering investing in a new dock that will cost $280,000 and salvage is $80,000. The company expects to use the dock for
LakeFront Co. is considering investing in a new dock that will cost $280,000 and salvage is $80,000. The company expects to use the dock for 5 years. Lakefront anticipates cash flows of $50,000 resulting from the new dock and the company's borrowing rate is 8%, while its required rate of return (cost of capital) is 10%. Instructions: 1. Calculate the net present value of the dock and indicate whether LakeFront should make the investment. 2. Calculate the accounting rate of return.
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