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need fast Murad is considering starting a small catering business. He would need to purchase a delivery van and various equipment costing $125,000 to equip
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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 $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): Present Value of an Annuity of SI in Arrears 11 [ 1 - 1(1-1)n] Present Value of Sl: 1 (1+1 Periods 10% 11% 12% 13% 0.735 0.708 0.683 0.659 0.636 0.613 0681 0 650 0.621 0.593 0.567 0.543 6 0.630 0.596 0.564 0.535 0.507 0.480 7 05830.5470513 0.482 0.452 0.425 Periods 8% 10% 11 120 13% 2 3.3123240 3.1703 102 3 0372.974 3.890 3.791 3.696 3.605 3.517 6 4486 4355 4.231 3 998 4.868 4.564 4.423 Required: Compute the net present value of this investment For the toolbar, press ALT=F10 (PC) or ALT=EN+F10 (Mac). 14% 15% 16% 17% 0.592 0.572 0.552 0.534 0.519 0.497 0.476 0.456 0.456 0.432 0.410 0.390 0.400 0.376 0.354 0.333 14% 15 16% 2.914 2.855 2.798 2.743 3.433 3.352 3.274 3. 199 3.8893.784 3.685 3.589 1288 4160 4.089 3.922) 17% Paragraph : 55 A 21 % a ogStep by Step Solution
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