Ignore income taxes in this problem.) The management of Londo Corporation is inv

Question

Ignore income taxes in this problem.) The management of Londo Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 4 years. The company uses a discount rate of 20% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is $(316,440). Click here to view Exhibit 8B-2 to determine the appropriate discount factor(s) using tables. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round your final answer to the nearest dollar amount.) A. $63,288 B. $79,110 C. $122,225 D. $316,440

Explanation / Answer

Answer:

Annual Intanginle benefits to make the investment in the aircraft financially attractive would be

= Negetive Net present value / Present value annuity factor for 4 yeras @20%

= 316,440 / 2.5889 = 122,225 (Approx.)

So the answer is C. = $122,225:

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