Operating and terminal cash flows for this investment

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Reference no: EM132053608

Scenic Tours Inc. is looking to expand its business and is considering the purchase of 5 new buses at a cost of $120,000 each. The buses would have a useful life of 4 years and would be depreciated straight line to a zero salvage value. The new buses would increase annual revenues by $300,000 per year. Operating expenses are 40% of revenues, the tax rate is 34% and the firm’s cost of capital is 9%. What are the initial, operating and terminal cash flows for this investment? What is the npv?

Reference no: EM132053608

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