Bangle Hair Design Studios would like to purchase another hair salon that is being sold in a neighboring town for $$510,000.$ Assume cash flows occur at the end of the year. Based on past volume

of sales, Bangle estimates the net cash flows that would be generated by the salon:

$($Click the icon to view the net cash flows.$)$

After six years, Bangle can sell the salon for $$290,000.$

$($Click the icon to view the Future Value of $$1$ table.$)$

$($Click the icon to view the Present Value of $$1$ table.$)$

$($Click the icon to view the Future Value of an Ordinary Annuity table.$)$

$($Click the icon to view the Present Value of an Ordinary Annuity table.$)$

$($Click the icon to view the Future Value of an Annuity Due table.$)$

$($Click the icon to view the Present Value of an Annuity Due table.$)$

Requirement

If the interest rate on this investment is $4\%$ compounded annually, should Bangle purchase the salon?

First, calculate the present value of the cash inflows from the new salon. $($Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your

calculations. Use the same method for all calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X$.$XXXXX$.$ Round

intermediary currency computations and your final answer to the nearest cent, $X$.$XX$.)$

The present value of the cash inflows from the new salon amounts to

Bangle

purchase the salon.