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Rundle Company is considering investing in two new vans that are expected to generate combined cash inflows of $ 2 8 , 5 0 0
Rundle Company is considering investing in two new vans that are expected to generate combined cash inflows of $ per year.
The vans' combined purchase price is $ The expected life and salvage value of each are five years and $ respectively.
Rundle has an average cost of capital of percent. PV of $ and PVA of $
Note: Use appropriate factors from the tables provided.
Required
a Calculate the net present value of the investment opportunity.
Note: Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to
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 or REJECTED.
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