Question
Load Off Your Mind moving company is considering investing in a new moving van to expand its business operations. The cost of the new van
Load Off Your Mind moving company is considering investing in a new moving van to expand its business operations. The cost of the new van is $75,000. The firm is currently earning an annual rate of eight percent on their investment portfolio. The company expects to have the following cash flows from the expansion project; $33,000 in year one; $35,000 in years two through seven; and $27,000 in years nine through twelve. The firm will have to rebuild the vans in year eight, which will cost the company an additional cash outflow of $41,000. What is the net present value (NPV) of Load Off Your Minds investment? Should the firm invest? Explain why or why not.
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