Question

Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: Initial investment (for two hot air balloons) $ 411,000 Useful life 7 years Salvage value $ 40,000 Annual net income generated 34,524 BBS’s cost of capital 7 % Assume straight line depreciation method is used. Recalculate the NPV assuming BBS's cost of capital is 10 percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.)

Answer 1