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Exercise 10-5A (Algo) Determining net present value LO 10-2 Franklin Company is considering...

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Accounting

Exercise 10-5A (Algo) Determining net present value LO 10-2
Franklin Company is considering investing in two new vans that are expected to generate combined cash inflows of $31,500 per year.
The vans' combined purchase price is $97,000. The expected life and salvage value of each are five years and $20,100, respectively.
Franklin has an average cost of capital of 12 percent. (PV of $1 and PVA of $1)
Note: Use appropriate factor(s) 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 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.
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