Postal Letter

Accounting Home Work Question...C&K inc. purchased a delivery van costing $50,000. Annual operating cash?

C&K inc. purchased a delivery van costing $65,000. Annual operating cash inflows are expected to be $18,000 each year for six years. At the end of the asset's life, the salvage value is expected to be $5,000. Assuming C&K's cost of capital is 15 percent, what is the asset's net present value? (ignore income taxes) A) $3,121 B) $22,044 C) $5,283 D) $959

Public Comments

1. If it was "just" purchased, then it's NPV is equal to cost, or $65,000.00. Otherwise, if it was purchased one or more years ago, you have to state when.
2. C) 5283 Discount the cash flows of 18000 to the present value and the salvage value of 5000. Add the two together and subtract from 65000.