Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing li...
Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows:
| Year 1 | Year 2 | Year 3 | Year 4 | |
| Net income | $5,100 | $6,500 | $6,300 | $3,000 |
| Operating cash flows | 16,900 | 18,250 | 18,050 | 14,600 |
(Click here to see present value and future value tables)
A. What is the NPV of the investment? Round your present value factor to three decimal places and final answer to the nearest dollar.
$
B. What happens if the required rate of return increases?
If the required rate of return increases, .
Homework Answers
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Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing li...
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occur evenly within each year. Assume that the company requires a
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