Vemon Company is considering investing in two new vans that are expected to generate combined cash inflows of $26,500 per year. The vans' combined purchase price is $94,500. The expected life and salvage value of each are four years and $22,000, respectively. Vernon has an average cost of capital of 14 percent (PV of $1 and PVA of S1) (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.) 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. TABLE 1 PRESENT VALUE OF $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & & 5% & 6% & 7% & 8% & s & 10 & 12% & 14% & 16% & 20% \\ \hline 1 & 0.961538 & 0.952381 & 0.943396 & 0.934579 & 0.925926 & 0.917431 & 0.909091 & 0.892857 & 0.877193 & 0.862069 & \begin{tabular}{r} 0.833333 \\ 0.694444 \end{tabular} \\ \hline & \begin{tabular}{l} 7556 \\ -1996 \end{tabular} & 0.90 & \begin{tabular}{l} 0.889996 \\ 0.839619 \end{tabular} & 0.873439 & 0.857339 & 0.841680 & 0.826 & 0.797194 & \begin{tabular}{l} 0.769468 \\ 0.674972 \end{tabular} & \begin{tabular}{l} 0.743163 \\ 0.640658 \end{tabular} & \begin{tabular}{l} .694444 \\ .578704 \end{tabular} \\ \hline & 9996 & & \begin{tabular}{l} 0.839619 \\ 0.792094 \end{tabular} & \begin{tabular}{l} 0.816298 \\ 0.762895 \end{tabular} & \begin{tabular}{l} 0.793832 \\ 0.735030 \end{tabular} & \begin{tabular}{l} 0.772183 \\ 0.708425 \end{tabular} & \begin{tabular}{l} 0.751315 \\ 0.683013 \end{tabular} & \begin{tabular}{l} 0.711780 \\ 0.635518 \end{tabular} & 0.592080 & 0.552291 & 482253 \\ \hline & & & 0.747258 & 0.712986 & & 0.649931 & 0.620921 & 0.567427 & 0.519369 & 0.476113 & 101878 \\ \hline & 821927 & \begin{tabular}{l} 0.783526 \\ 0.746215 \end{tabular} & \begin{tabular}{l} 47258 \\ 04961 \end{tabular} & 0.66 & 0.630170 & 0.596267 & & 0.506631 & 0.4555887 & 0.410442 & 0.334898 \\ \hline & \begin{tabular}{l} 0.790315 \\ 0.759918 \end{tabular} & \begin{tabular}{l} 0.746215 \\ 0.710681 \end{tabular} & 57 & 0.622750 & 0.583490 & 0.547034 & 0.513158 & 0. & 0.3 & 830 & 082 \\ \hline & & 0.67 & 12 & 0.582 & 0.540269 & 0.501866 & 0.466507 & 0.403883 & 0.350559 & 0.3 & \\ \hline & 0.702587 & 0.644609 & 0.591898 & 0.543934 & 0.500249 & 0.460 & 0.42 & 0.360610 & 0.307508 & 0.262953 & 0.193807 \\ \hline & 0.675564 & 0.613913 & 0.558395 & 0.508349 & 0.463193 & 0.422411 & 0.38 & 0.321 & & 0.226684 & 0.161506 \\ \hline & & 579 & 0.526788 & 0.475093 & 883 & 0.387533 & 0.350494 & 0.287476 & 0.2 & 0.195417 & 588 \\ \hline & 0.624597 & 0.55 & 0.496 & 0.444012 & 114 & & 31 & 5675 & 0.2 & 0.168463 & 0.112157 \\ \hline 13 & 0.600 & 0.53 & 0.4 & & & 0.32 & & 0.2 & & 227 & 64 \\ \hline 14 & 0.577475 & 0.505068 & 0.442301 & 0.387817 & 0.340461 & 0.29 & & & & 95 & 87 \\ \hline & 0 & 0.4 & 0.41 & 0.36 & 0.31 & 0.2 & 0.2 & 0.1 & 0.1 & 0.10 & \\ \hline & 0.533908 & 0.4581 & 0.3 & 0. & 0.29 & 0.25 & 0.2 & 0.1 & 0.12 & 0.09 & 0.054088 \\ \hline 17 & 0.513373 & 0.436297 & 0.371364 & 0.316 & 0.2702 & 0.231073 & 0.197 & 0.145 & 0.107 & 0.080207 & 0.045073 \\ \hline & & 0.4155 & 0.350344 & 0.295 & 0.250249 & 0.211994 & 0.179 & 0.130040 & 0.09 & 0.069 & 61 \\ \hline & & & & & & & & & & & \\ \hline & & 0.376889 & 0.311805 & 58419 & 0.214548 & 178431 & & 0.10 & 0.072762 & 0.051385 & 0.026084 \\ \hline \end{tabular} TABLE 2 PRESENT VALUE OF AN ANNUITY OF 31 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & & & & & & & & & 14% & & \\ \hline21 & & 0.952381 & 0.943396 & \begin{tabular}{l} 0.934579 \\ 1.808018 \end{tabular} & & 0.917431 & 0.909091 & \begin{tabular}{l} 0.892857 \\ 1.690051 \end{tabular} & \begin{tabular}{l} 0.877193 \\ 1.646661 \end{tabular} & 32 & \begin{tabular}{l} 0.833333 \\ 1.527778 \end{tabular} \\ \hline32 & \begin{tabular}{l} 1.886095 \\ 2.775091 \end{tabular} & \begin{tabular}{l} 1.859410 \\ 2.723248 \end{tabular} & \begin{tabular}{l} 1.833393 \\ 2.673012 \end{tabular} & \begin{tabular}{l} 1.808018 \\ 2.624316 \end{tabular} & \begin{tabular}{l} 1.783265 \\ 2.577097 \end{tabular} & \begin{tabular}{l} 1.759111 \\ 2.531295 \end{tabular} & \begin{tabular}{l} 1.735537 \\ 2.486852 \end{tabular} & \begin{tabular}{l} 1.690051 \\ 2.401831 \end{tabular} & \begin{tabular}{l} 1.646661 \\ 2.321632 \end{tabular} & \begin{tabular}{l} 605232 \\ 245890 \end{tabular} & \begin{tabular}{l} 1.527778 \\ 2.106481 \end{tabular} \\ \hline43 & \begin{tabular}{l} 2.775091 \\ 3.629895 \end{tabular} & \begin{tabular}{r} 2.723248 \\ 3.545951 \end{tabular} & \begin{tabular}{l} 2.673012 \\ 3.465106 \end{tabular} & \begin{tabular}{l} 2.6243116 \\ 3.387211 \end{tabular} & 3.312127 & \begin{tabular}{l} 2.5331295 \\ 3.239720 \end{tabular} & \begin{tabular}{l} 2.486652 \\ 3.169865 \end{tabular} & & 2.913712 & 28181 & \begin{tabular}{l} 2.106481 \\ 2.588735 \end{tabular} \\ \hline & 4.451822 & 4.329477 & \begin{tabular}{l} 3.212364 \\ 4.2104 \end{tabular} & 4.100197 & 3.992710 & 3.889651 & & 3.604776 & 3 & 274 & 990612 \\ \hline & 5.242137 & 5.075692 & 4.917324 & 4.766540 & 4.622880 & 4.485919 & 4.355261 & 4.111407 & 68 & 684 & 3.325510 \\ \hline & 6.002055 & 5.786373 & 5.582381 & 5.389289 & 5.206370 & 5.032953 & & 4.563757 & & & 4592 \\ \hline & 6.732745 & 6.463213 & 6.20 & 5,971299 & 5.746639 & \begin{tabular}{l} 5.534819 \\ 509529 \end{tabular} & \begin{tabular}{l} 5.334 \\ 5.759 \end{tabular} & & & 4.343591 & 3 \\ \hline & 7.435332 & 7.107822 & 6.801 & 6.515232 & 6.246988 & \begin{tabular}{l} 5.995247 \\ 6.417658 \end{tabular} & \begin{tabular}{l} 5.759024 \\ 6.144567 \end{tabular} & 5.328 & \begin{tabular}{r} 4.946372 \\ 5.16116 \end{tabular} & 4.606544 & \\ \hline & 8.110896 & \begin{tabular}{r} 7.721735 \\ 8306414 \end{tabular} & 7.3600 & 7.023582 & 6.710 & & \begin{tabular}{l} 6.144567 \\ 6.495061 \end{tabular} & \begin{tabular}{l} 5.650 \\ 5.937 \end{tabular} & 5.216116 & & \begin{tabular}{l} 4.192472 \\ 4,327060 \end{tabular} \\ \hline & 8.760477 & \begin{tabular}{l} 8.306414 \\ 8.863252 \end{tabular} & \begin{tabular}{l} 7.8868 \\ 8.3838 \end{tabular} & 7.490674 & 7.13 & \begin{tabular}{l} 6.805191 \\ 7.160725 \end{tabular} & \begin{tabular}{l} 6.495061 \\ 6.813692 \end{tabular} & \begin{tabular}{r} 5.937 \\ 6.194 \end{tabular} & 33 & \begin{tabular}{l} 5.028644 \\ 5.197107 \end{tabular} & 217 \\ \hline & \begin{tabular}{l} 9.385074 \\ 9.985648 \end{tabular} & \begin{tabular}{l} 8.8632 \\ 9.3935 \end{tabular} & \begin{tabular}{l} 8.383 \\ 8.852 \end{tabular} & 7.942686 & & \begin{tabular}{r} 7.160025 \\ 7.486904 \end{tabular} & \begin{tabular}{l} 6.813392 \\ 7.103356 \end{tabular} & \begin{tabular}{l} 6.194 \\ 6.42 \end{tabular} & \begin{tabular}{l} 292 \\ 362 \end{tabular} & \begin{tabular}{l} 5.347101 \\ 5.3434 \end{tabular} & \begin{tabular}{l} 4.439217 \\ 4.532681 \end{tabular} \\ \hline & \begin{tabular}{r} 9.985648 \\ 10.563123 \end{tabular} & \begin{tabular}{l} 9.393 \\ 9.696 \end{tabular} & & \begin{tabular}{l} 8.357 \\ 8.745 \end{tabular} & \begin{tabular}{l} 7.90 \\ 8.24 \end{tabular} & & 7.366 & \begin{tabular}{l} 6.423548 \\ 6.628168 \end{tabular} & \begin{tabular}{l} 5.842362 \\ 6.002072 \end{tabular} & 5.46 & \begin{tabular}{l} 4,332 \\ 4,6105 \end{tabular} \\ \hline & \begin{tabular}{l} 10.5631 \\ 11.1183 \end{tabular} & \begin{tabular}{r} 9.696641 \\ 10.379658 \end{tabular} & \begin{tabular}{l} 9.294 \\ 9.7122 \end{tabular} & \begin{tabular}{l} 8,745468 \\ 9.107914 \end{tabular} & 8.55 & & & 864 & 68 & & \\ \hline & 11.652296 & 10.837 & 10.105 & 9.446 & 8.851 & 8.312 & 7.823709 & 986 & & 497 & 4.729561 \\ \hline & 12.16 & 11.2 & & 9.76 & 9.12 & 8.543 & 8.021553 & 7.119630 & & \begin{tabular}{l} 5.748704 \\ 5 \end{tabular} & 4.774634 \\ \hline is & 97 & 11.609587 & 10.827603 & 10.059087 & 9.371887 & 8.75 & 8,20 & & & 5.817848 & \begin{tabular}{l} 4.812195 \\ 4.843496 \end{tabular} \\ \hline 19 & 13.133 & 12.085321 & 11.158116 & \begin{tabular}{l} 10,335595 \\ 10.594014 \end{tabular} & \begin{tabular}{r} 9.603599 \\ 9.818147 \end{tabular} & \begin{tabular}{l} 8.905115 \\ 9.128546 \end{tabular} & \begin{tabular}{l} 8.364920 \\ 8.513564 \end{tabular} & \begin{tabular}{l} 7.365777 \\ 7.469444 \end{tabular} & \begin{tabular}{r} 6.550369 \\ 6.623131 \end{tabular} & \begin{tabular}{l} 5.877455 \\ 5.928841 \end{tabular} & \begin{tabular}{l} 4.843496 \\ 4.869580 \end{tabular} \\ \hline 20 & 13.590326 & 12.462210 & 11.469921 & 14 & & & & & & & \\ \hline \end{tabular}