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A food chain company is experiencing a capacity shortage problem, being very famous brand of fast food. The company is planning to open a new

A food chain company is experiencing a capacity shortage problem, being very famous brand of fast food. The company is planning to open a new outlet in Sohar, which would require initial investment of $ 220,000. Information on the expected revenues and costs (salaries of staff, rent and other expenses) for next years is given below:

Year

Expected revenue

($)

Expected Annual Costs ($)

2020

64000

21000

2021

76000

24000

2022

85000

26000

2023

94000

30000

2024

108000

32000

2025

102000

36000

2026

116000

41000

The applicable interest rate is 9% per annum and it is compounded annually.

a) Prepare a cash flow diagram for the given data.

b) Compute the NPW of the future cash flows.

c) Compute the FW at the end of 2026 of given cash flows.

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