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A store will cost $600,000 to open. Variable costs will be 50% of sales and fixed costs are $200,000 per year. The investment costs will
A store will cost $600,000 to open. Variable costs will be 50% of sales and fixed costs are $200,000 per year. The investment costs will be depreciated straight-line over the 13 year life of the store to a salvage value of zero. The opportunity cost of capital is 6% and the tax rate is 35%.
The operating cash flow each year is 81,153.85 if sales revenue is $600,000 per year.
Using an operating cash flow of 81,153.85, calculate the Net Present Value. Should the store be opened?
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