Janet$$s Ice Cream is the market leader in Florida for walkup ice cream

parlors. The CEO is considering investing in new freezers for each of

its $120$ locations. The freezers would cost $$12,500$ to purchase and an

additional $$3,000$ to install at each location.

$$ All of these expenses are considered investment and would be

depreciated over five years straight$-$line to a zero$-$dollar salvage value.

$$ Additionally, the freezers will require $$1,000$ of maintenance expense at

each of the locations.

$$ Currently the business brings in $$8\mathrm{.}75$ million of revenue across all of

its locations. Planning estimates the new freezes would increase

revenue by $10\%$ per year.

$$ Janet$$s incurs a $30\%$ tax rate and evaluates projects using a $9\%$ discount

rate.

$$ Evaluate FCF for the next five years and determine whether this is an

attractive investment from an NPV perspective.

$$ Does your view on the project change if revenue only increased $5\%$ per

year?