Less selling and admin . expenses 28,000 Net operating income $ 12,000 2 . Question : ( TCO I ) ( Ignore income taxes in this problem .) Bill Anders retires in 8 years . He has $ 650,000 to invest and is considering a franchise for a fastfood outlet . He would have to purchase equipment costing $ 500,000 to equip the outlet and invest an additional $ 150,000 for inventories and other working capital needs . Other outlets in the fast-food chain have an annual net cash inflow of about $ 160,000 . Mr . Anders would close the outlet in 8 years . He estimates that the equipment could be sold at that time for about 10 % of its original cost . Mr . Anders ' required rate of return is 16 %. Required : Part A : What is the investment ' s net present value when the discount rate is 16 %? Part B : Refer to your calculations . Is this an acceptable investment ? Why or why not ? 3 . Question : ( TCO A ) The following data ( in thousands of dollars ) have been taken from the accounting records of the Maroon Corporation for the just-completed year . Sales 1,300 Raw materials inventory , beginning 25 Raw materials inventory , ending 30 Purchases of raw materials 250 Direct labor 350 Manufacturing overhead 500 Administrative expenses 300 Selling expenses 250 Work in process inventory , beginning 150