Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jane Summers, a minister in an area church, has just inherited money from her mother's estate. She is considering investing part of these funds in

image text in transcribed

Jane Summers, a minister in an area church, has just inherited money from her mother's estate. She is considering investing part of these funds in a small catering operation to compliment the Church's current social action projects. She would need to purchase a delivery van, pots, pans, computers and various other equipment costing $180,000 to start the busines right now. She would be required to set aside $10,000 in working capital that will be released at the end of the project. Jane's marketing studies indicate that the annual cash inflow from the project will amount to $90,000. She will need to pay rent on th building to be used by the business of $24,000 per year In addition to the building rent, other annual cash expenses for food, supplies, utilities and other operating costs will amount to $30,000. Jane will use volunteers so she will not need to pay labor. She hopes to use the catering business to teach new skills to the unemployed. Jane wants to operate the catering business for only six years. She estimates that the equipment could be sold at the end of the sixth year for $20,000. * The church uses a required rate of return of 6%. Ignore taxes and depreciation. With this information, answer the questions below. What is the net present value of the project? What is the internal rate of return of the project? Question 3 O pts Upload your spreadsheet for the question above to this space. Upload Choose a File Question 4 30 pts Write a brief memo explaining your recommendation about the project and why. Be complete in your answer to receive full credit. Use an appropriate decision model to make your recommendation. Upload Choose a File

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

Financial Accounting And Reporting

Authors: Mr Barry Elliott, Jamie Elliott

16th Edition

027377817X, 978-0273778172

More Books

Students also viewed these Accounting questions

Question

How does an applicant apply?

Answered: 1 week ago