(Ignore income taxes in this problem.) Burchell Corporation is investigating buying a small used aircraft for the use of its executives. The aircraft would have a useful life of 7 years. The company uses a discount rate of 15% in its capital budgeting. The net present value of the initial investment and the annual operating cash cost is -$594,381. Management is having difficulty estimating the annual benefit of having the aircraft and estimating the salvage value of the aircraft.
-Ignoring any salvage value,to the nearest whole dollar how large would the annual benefit have to be to make the investment in the aircraft financially attractive?
A) $594,381
B) $89,157
C) $84,912
D) $142,880
Correct Answer:
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