Question
3. Calculate the net present value, payback period, and the traditional IRR for each tanning option under the various scenarios. What do the decision rules
3. Calculate the net present value, payback period, and the traditional IRR for each tanning option under the various scenarios. What do the decision rules indicate?
4. Can Jenny evaluate this business project by assuming just a one-time purchase? Why or why not? What other evaluation methods should Jenny use?
5. If you decide to use the replacement chain method, how does the calculation and decision change?
6. What are some externalities, side effects, and other relevant issues that could affect the decision?
7. Based upon your analysis, which of the two units is too hot to handle? Why?
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As per our conversation, I am attaching a comparison table showing the relative costs and features of the dome and bed units. Please call our toll-free number if you need any more information. We look forward to doing business with you. Dome Unit Tanning Bed $2800 $200 $0.30 Cost (including shipping) Setup cost Electricity cost per session Number of sessions/hour Number of bulbs needed Cost per bulb $7800 $500 $0.50 4 48 $22 3 28 $22 Bulb life Unit life Suggested price/visit Space requirement 1300 hours 1300 hours 8 years 5 years $3 $3 9 ft. x 5ft, x 5ft, 10 ft. x 10 ft. room Other income Tanning lotion Profit per sale 1 bottle/10 sessions $5 As per our conversation, I am attaching a comparison table showing the relative costs and features of the dome and bed units. Please call our toll-free number if you need any more information. We look forward to doing business with you. Dome Unit Tanning Bed $2800 $200 $0.30 Cost (including shipping) Setup cost Electricity cost per session Number of sessions/hour Number of bulbs needed Cost per bulb $7800 $500 $0.50 4 48 $22 3 28 $22 Bulb life Unit life Suggested price/visit Space requirement 1300 hours 1300 hours 8 years 5 years $3 $3 9 ft. x 5ft, x 5ft, 10 ft. x 10 ft. room Other income Tanning lotion Profit per sale 1 bottle/10 sessions $5Step by Step Solution
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