Sasha is interested to purchase a beverage bar. The business could be purchased for $270,000. The beverage bar sells 150,000 cups a year at an average price of $4.00 per disposable cup. Sasha estimates that the fixed costs of the business are $200,000 a year, and variable costs are $2.00 per cup. The beverage bar has five years remaining on a lease at the end of which it will be dismantled as part of a major renovation project for the shopping centre in which it is located. An estimation of the depreciable value of the equipment and fittings that would be acquired with the business would be $100,000, and can be depreciated on a straight-line basis over five years for tax. The salvage value of the equipment and fittings is estimated to be around $20,000 in five years.

1. Given a required return of 15% and a tax rate of 25%, what is the estimated NPV of this business?
2. Calculate the number of cups that would need to be sold annually to achieve a financial breakeven.
3. Based on the analysis in parts a) and b), should she purchase the business?