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Please help ASAP Alix Entrepreneur is planning to invest in a luxury spa in Nanaimo which will offer sports and relaxation massage, spray tanning facial
Please help ASAP
Alix Entrepreneur is planning to invest in a luxury spa in Nanaimo which will offer sports and relaxation massage, spray tanning facial treatments, and laser therapy. She has commissioned a study which indicates there is a significant market for these services in her geographic area among professional men and women In 2019 she intends to invest $700,000 in building and equipping the spa facility. She expects the annual net cash inflow to be $150,000 the first year, $250,000 the second year, and $500,000 the third year. At the end of the third year she expects to sell the business for $400,000. Alix would like to earn an annual return of 14% on her investment Years O initial investment in building etc. $700,000 47 cash generated by the business $150.000 2 cash generated by the business $250,000 3 cash generated by the business $500,000 3 sale of the business $400,000 Required: a. Calculate the net present value of the cash inflows and outflows, using Alix's desired rate of return of 14%. (4 marks) b. Based on your calculations in part A above, what can you say about Alix's proposed investment? (3 marks) CStep by Step Solution
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