Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sandra runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate objects

image text in transcribed
Sandra runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate objects for fun. Preliminary analysis on her so-far-so-good revenues (which are essentially pure profit to her) indicates a positive NPV of $27,400. If she ran this analysis based on 7 years of productivity, using a 6% discount rate and a 23% tax rate, what annual before-tax cash flow did she use? (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36. Annual before-tax cash flow If she wants to cut back on her time dedicated to this business, what amount of revenue (before-tax) could she earn and still have an NPV of $6,850 ? (Round present value foctor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5.125 .36 \). Annual before-tax cash flow What percentage reduction in workload would this represent for her? (Round answer to 0 decimal places, e.g. 15\%.) Click here to view the factor table Percentage reduction % Sandra runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate objects for fun. Preliminary analysis on her so-far-so-good revenues (which are essentially pure profit to her) indicates a positive NPV of $27,400. If she ran this analysis based on 7 years of productivity, using a 6% discount rate and a 23% tax rate, what annual before-tax cash flow did she use? (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36. Annual before-tax cash flow If she wants to cut back on her time dedicated to this business, what amount of revenue (before-tax) could she earn and still have an NPV of $6,850 ? (Round present value foctor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5.125 .36 \). Annual before-tax cash flow What percentage reduction in workload would this represent for her? (Round answer to 0 decimal places, e.g. 15\%.) Click here to view the factor table Percentage reduction %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Financial Accounting Concepts Paperback By Edmonds Thomas P O

Authors: Thomas P. Edmonds, Christopher Edmonds, Mark A. Edmonds, Jennifer Edmonds, Philip R. Olds

11th Edition

9781264266234, 1264266235

More Books

Students also viewed these Accounting questions