Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i am trying to work out NPV and IRR of the following hypotheitcal situation over 10 years with a DF 12%. - Store will closed

i am trying to work out NPV and IRR of the following hypotheitcal situation over 10 years with a DF 12%.

- Store will closed for refurbishment start of september ready to open start of december.

- Refurb cost 710,000 depreciated over 10 years.

- Additional store counter fitting cost 30,000

will cease to sell product lines with a usual revenue of

Month Typical sales
January 41,650
February 57,850
March 42,875
April 44,100
May 45,325
June 46,550
July 47,775
August 46,550
September 45,325
October 42,875
November 45,815
December 47,775

generating 50% profit margin. This line has inflation rate of 1.94%

-stop of product lines generates saving of 145,800 per year at 5% inflation

-Commence new product line generating revenue of 2,311 per week with 3.52% inflation. 75% profit margin

-Have retail-in-retail concession generating rent of store area of 180,000 per year at 5% inflation

-Nearby store selling same product lines causes cannibalisation of sales of 1,000 per week

- tax rate 20% paid in the year to which it relates

Year 1 is trading for 39 weeks not 52. year 2 resumes to 52 weeks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

10th Edition

1119491630, 978-1119491637, 978-0470534793

Students also viewed these Accounting questions

Question

6.64 Find zo such that P(z> zo) = 0.5.

Answered: 1 week ago