The management of Byrge 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 5 years. The company uses a discount rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$ 395,750. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
The management of Byrge 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 5 years. The company uses a discount rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$ 395,750. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 4P
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![The management of Byrge 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 5 years. The company uses a discount
rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$
395,750. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate
discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the
investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest
whole dollar amount.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1fb6f68d-f117-4fd4-bb5c-714d114e1d29%2F357c2101-44ca-4726-824e-21aa61dc6a59%2Frmxpb6f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The management of Byrge 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 5 years. The company uses a discount
rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$
395,750. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate
discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the
investment in the aircraft financially attractive? (Round your intermediate calculations and final answer to the nearest
whole dollar amount.)
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