Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Goewelyn is considering opening a new business for a long-term care facility. The initial investment for the business is $650,000 which includes constructing the housing

image text in transcribed
Goewelyn is considering opening a new business for a long-term care facility. The initial investment for the business is $650,000 which includes constructing the housing unit and purchasing other assets for tax purposes, the projected salvage value of all the assets is $80,000 The government requires depreciating the assets using the straight line method over the business's life of 15 years. Gaowelyn is trying to estimate the net cashflows after tox for this business. She has already figured out that the business will generate on annual ofter-tox cash inflow of $85,000 from the operation. She now needs your help to estimate the net cash inflow that she will receive from selling the facility's assets at the end of 15 years Goewelyn's required return is 8% Required: (Goewelyn estimates that of the economic is booming at the end of the 15 years, she can sell the assets for $118,000 Assuming the tax rate of 30%, what is the net ofter-tax cashflow Goewelyn will receive from selling her assets at the end of 15 years? (Please round your answer to the nearest dollar) $ (2) Gaewelyn is able to sell her assets for $118.000, as mentioned in (1) above, what is the internal Rate of Return (IRR) for Gaewelyn's business? (Please round your answer to two decimal points, le. XXXX%) (3) Goewelyn estimates that if the economy is in recess at the end of the 15 years, she can sell the assets for $50,000. Assuming the tax rate of 30%, what is the net after tax cashflow Goewelyn will receive from selling her assets at the end of 15 years? (Please round your answer to the nearest dollar) $ (4) If Goewelyn is able to sell her assets for $50,000, as mentioned in (3) above, what is the Net Present Value (NPV) for Gaewelyn's business? (Please round your answer to two decimal points) $1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Impact Of SOA On IT Auditing From Auditors Point Of View

Authors: Farida Chotkan

1st Edition

3843363048, 978-3843363044

More Books

Students also viewed these Accounting questions

Question

d. How were you expected to contribute to family life?

Answered: 1 week ago