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Please answer the requirement 2. Thanks! Spruce Grove Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking
Please answer the requirement 2. Thanks!
Spruce Grove Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high-efficiency washing machines that will allow for the laundry's status to be checked via smartphone. Spruce Grove estimates the cost of the new equipment at $203,000. The equipment has a useful life of 9 years. Spruce Grove expects cash fixed costs of $75,000 per year to operate the new machines, as well as cash variable costs in the amount of 5% of revenues. Spruce Grove evaluates investments using a cost of capital of 8%. (Click the icon to view the future value of \$1 factors.) (Click the icon to view the future value annuity of $1 factors.) (Click the icon to view the present value of $1 factors.) (Click the icon to view the present value annuity of $1 factors.) Required Requirement 2. Assume instead that Spruce Grove expects an uneven stream of incremental cash revenues from installing the new washing machines. Based on this estimated revenue stream, what are the payback and discounted payback periods for the investment? Start by determining the net initial investment unrecovered amounts at the end of each year by first entering the net cash inflow(outflow) amounts and then calculating the cumulative net cash flows for each year. (Use a minus sign or parentheses for net cash outflows and to show negative cumulative net cash flows. Once the net initial investment is fully recovered, enter a zero for that year's line and for each subsequent year's line in the "net initial investment unrecovered at end of year" column.)Step by Step Solution
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