Question
An investor is analyzing the possibility of setting up a laundry with the following economic conditions: a) Initial investment of $150,000,000 (fixed assets 80% and
An investor is analyzing the possibility of setting up a laundry with the following economic conditions: a) Initial investment of $150,000,000 (fixed assets 80% and working capital 20%): b) First year operating income: $75.000.000 c) Annual increase in operating income: 5% annually d) First year operational expenses: $ 25.000.000 e) Annual increase in operational expenses: 3.5% annually f) The salvage value at the end of the project evaluation horizon, set at 5 years, is equal to the book value of the fixed assets, whose useful life is 10 years. ) Se g foresees the purchase of new laundry equipment with better technology in year 3, for a value of $35,000,000, with a useful life of 10 years. h) Of the fixed assets acquired in year 0, it is expected to be sold at the time of purchase of the new equipment, one of the equipment that was acquired for $25,000,000 with a useful life of 10 years and which is expected to be sold for its book value. Given a tax rate of 35%, inflation of 4% annually, and if the investor's opportunity rate is 20% effective annually,
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