Question:

Thornton Company is considering investing in two new vans that are expected to generate combined cash inflows of $33,500 per year. The vans' combined purchase price is $91,000. The expected life and salvage value of each are eight years and $20,200, respectively. Thornton has an average cost of capital of 10 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.)

table 1

http://connect-nonprod.mheducation.com.s3.amazonaws.com/Media/Demo/bne/Edmonds_8e_1259748588/pv_table.jpg

table 2

http://connect-nonprod.mheducation.com.s3.amazonaws.com/Media/Demo/bne/Edmonds_8e_1259748588/pva_table.jpg