Estimate all cash flows of the project (initial outlay and net cash flows). Marginal tax rate = 20%.

The cost of the building and all equipment that are used to get the new branch up and running is $500,000. The expected life of the branch is 25 years. At the end of this period, the building and the equipment are expected to be sold at $100,000. The new building and will be depreciated using a straight-line method to a salvage value of zero. The new store will be built on a leased land. The annual lease cost is $10,000 per year. The new store will need an initial investment in net working capital of $50,000. After we surveyed the market and estimated the demand, the annual sales are estimated to be $200,000, $25,000 of which will be taken from the first branch. In terms of costs, the annual cost of running the branch is expected to be $65,000. Revenues and expenses will remain stable over the life of the project. The cost of the building and all equipment that are used to get the new branch up and running is $500,000. The expected life of the branch is 25 years. At the end of this period, the building and the equipment are expected to be sold at $100,000. The new building and will be depreciated using a straight-line method to a salvage value of zero. The new store will be built on a leased land. The annual lease cost is $10,000 per year. The new store will need an initial investment in net working capital of $50,000. After we surveyed the market and estimated the demand, the annual sales are estimated to be $200,000, $25,000 of which will be taken from the first branch. In terms of costs, the annual cost of running the branch is expected to be $65,000. Revenues and expenses will remain stable over the life of the project