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Fulmar Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing
Fulmar Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Fulmar estimates the cost of the new equipment at $203,000. The equipment has a useful life of 9 years Fulmar expects cash fixed costs of $78,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues Fulmar evaluates investments using a cost of capital of 8%. Present Value of $1 table Present Value of Annuity of $1 table Future Value of Annuity of $1 table Read the requirements Calculate the payback period and the discounted payback period for this investment, assuming Fulmar expects to generate $165,000 in incremental revenues every year from the new machines 2. Assume instead that Fulmar expects an uneven stream of incremental cash revenues from installing the new washing machunes Based on this estimaled revenue stream, what are the payback and discounted payback penods for the investment? Revenue stream
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