Question
Michelle runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate
Michelle runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate objects for fun. Preliminary analysis on her so-far-so-good revenues (which are essentially pure profit to her) indicates a positive NPV of $30,700. If she ran this analysis based on 7 years of productivity, using a 4% discount rate and a 23% tax rate, what annual before-tax cash flow did she use? (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36.) Annual before-tax cash flow $ If she wants to cut back on her time dedicated to this business, what amount of revenue (before-tax) could she earn and still have an NPV of $10,745? (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36.) Annual before-tax cash flow $ What percentage reduction in workload would this represent for her? (Round answer to O decimal places, e.g. 15%.) Click here to view the factor table Percentage reduction %
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