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Please answer all parts Please show all work including charts where required. Please just try to answer the question completely and accurately. 8. You are
Please answer all parts
Please show all work including charts where required.
Please just try to answer the question completely and accurately.
8. You are deciding whether to open a Lebanese restaurant in town. Sales in the next year will be 190K and will increase 20% each year. The life expectance of the project is 7 years. The equipment will cost $84k and will be depreciated straight-line to zero over seven years. You can sell the equipment at the end of the project's useful life for $5k. You will need to maintain inventories in order to keep up with the demand of your product. You will need $10k in net operating working capital right away. Variable costs are 64% of sales and fixed costs are $7k each year. Assume that the tax rate is 40% and that the required return is 13%. What is the NPV for this project? What is your recommendationStep by Step Solution
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