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Jolly Roger s is a national chain of seafood restaurants that has been very successful over the past 2 0 years. However, the growth potential
Jolly Rogers is a national chain of seafood restaurants that has been very successful over the past years. However, the growth potential in this market has declined and therefore Roger is contemplating investing in a new line of businessa pet store. Roger can enter this new field by purchasing and renovating a small building a few blocks from South Beach for a cost of $ which will be depreciated on a straightline basis to a zero book value over years. Although the depreciable life is years, the entire project is expected to be sold off for a salvage value of $ at the end of years. It is estimated that the project would generate sales of $ per year. Variable costs including all labor and material will be of sales, and fixed annual operating expenses are expected to be $ per year. About $ of added receivables and inventories will be needed. Accounts payable are expected to increase by $ Roger currently has a cost of capital of which corresponds to a beta of A pet store has a beta of The rate of return on the market portfolio is Rogers tax rate is What is the NPV of this project?
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