QUESTION

A student would like to invest in a business idea consisting of hiring vending machines for 3 years and using them to sell healt1Y snacks. The student would need to pay an initial instalment of 2,000 to the hire company and then El ,OOO at the end of each of the 3 years. At the end Of the 3 years, the vending machines would be retumed without any payment. The student predicts that the project would generate E3,OOO in revenues per year, while expenses would amount to E500 per year, and an annual tax rate of 10% would be paid on profits. The student expects a discount rate of 1 Show, with the use of appropriate calculations, whether the project would be a valuable investment. State your assumptions and comment on your solution.