Question
A shop is thinking of starting selling cream cakes. It will be necessary to spend $1,100 on buying cream making equipment. It is planning to
A shop is thinking of starting selling cream cakes. It will be necessary to spend $1,100 on buying cream making equipment. It is planning to sell ice-cream cakes for 7 years and generate $700 in annual after-tax profits. Like other local ice-cream sellers, it is expecting to be able to make a 9% annual return on this investment.
It expects this business to be profitable (which can be easily verified!). However, there's one issue! The bakery is worried that it might be over-estimating the annual sales of these ice-cream cakes. What will be the percentage change in the estimated Net Present Value of this ice-cream cake project if the annual after-tax profits turn out to be $100 lower than the bakery's original estimate?
The percentage change in the estimated Net Present Value of the project is positivenegative20.77 %25.42 %34.30 %48.48 %55.81 %67.95 % (select positive or negative, i.e., the sign) positivenegative20.77 %25.42 %34.30 %48.48 %55.81 %67.95 % (select the percentage value).
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