Murad is considering starting a small catering business. He would need to purchase a delivery van and various equipment costing $125,000 to equip the business and another $60,000 for working capital needs. Rent for the building used by the business will be $35,000 per year. In addition to the building rent, annual cash outflow for operating costs will amount to $40,000. Murad's marketing studies indicate that the annual cash inflow from the business will amount to $120,000. All of working capital would be released at the end of 6 years. Murad wants to operate the catering business for only six years. He estimates that the equipment could be sold at that time for 4% of its original cost. Murad uses a 16% discount rate. Use the following present value tables, to determine the appropriate discount factor(s): 12% Present Value of $i; 1(1+1) Periods 8% 9% 10% 11% 13% 14% 15% 16% 17% 4 0.735 0.708 0.683 0.659 0.636 0.613 0 5920.572 0.552 0.534 Present Value of an Annuity of $1 in Arrears: 11[1-1(1+r)n] 5 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 6 0.630 0.596 0.564 | 0.535 0.507 0.480 0.456 0.432 0.4100 390 7 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 Periods 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 4 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 5 3.993 3.890 3.791 | 3.696 3.605 3.517 3.433 3.352 3.2743.199 6 4.623 4.486 4355 4.231 | 4.111 3.9983.8893.784 3.6853.589 7 5.206 5.033 4.8684.712 | 4.564 | 4.423 | 4.288 | 4.160 4.039 3.922 Required: Compute the net present value of this investment. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BI U s Paragraph Arial 14px T. > >ITI V = X X x v +7 EE2 | 0 @