Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to u

Question

Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows:     

Assume straight line depreciation method is used.

Initial investment $ 310,000 Useful life $ 10 years Salvage value 25,000 Annual net income generated $ 6,800 FCA's cost of capital 7 % PA11-4 Part 3 3. Ne: present value NPV). Future Value oft $1. Dresent value ofS1. dollar. BIRAntValue Annuityors1 (use appropriate factoris) from the tables provided. Negative amcunt should be Indicated by a minus sign. Round the final answer to nearest whole

Explanation / Answer

Net present value = Present value of cash inflow-Present value of cash outflow

Annual cash inflow = 6800+(310000-25000/10) = 35300

Net present value = (35300*7.02358+25000*0.50835)-310000

Net present value = -49359

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.