Question list

$$ Question $1$

Question $2$

Question $3$

Rapture Hair Design Studios would like to purchase another hair salon that is being sold in a neighboring town for $$540,000.$ Assume cash flows occur at the end of the year. Based on past volume of sales, Rapture estimates the net cash flows that would be generated by the salon:

$($Click the icon to view the net cash flows.$)$

After six years, Rapture can sell the salon for $$320,000.$

$($Click the icon to view the Future Value of $$1$ table.$)$

$($Click the icon to view the Future Value of an Ordinary Annuity table.$)$

$($Click the icon to view the Future Value of an Annuity Due table.$)$

$($Click the icon to view the Future Value of an Annuity Due table.$)$

$($Click the icon to view the Present Value of $$1$ table.$)$

$($Click the icon to view the Present Value of an Ordinary Annuity table.$)$

Requirement

If the interest rate on this investment is $11\%$ compounded annually, should Rapture purchase the salon?

First, calculate the present value of the cash inflows from the new salon. $($Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. Use the same method for all calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X$.$XXXXX$.$ Round intermediary currency computations and your final answer to the nearest cent, $$x.xx.)$

The present value of the cash inflows from the new salon amounts to

Rapture $$ purchase the salon.

$$

$\backslash$table$[[$Years$,$Cash Flows$],[1-3,$$$,56,000],[4,,71,000],[5,,83,000],[6,,56,000]]$