Saved d Formula Sheet ated that you can get your favourite Starbucks drink during COVID cide to start a mobile Joe's Java coffee truck. You decide to rent a truck years until you graduate. u borrow $8,000 to equip the truck with the special coffee machines and other equipment. The interest rate on the loan is 5% compounded annually. Rental on the truck is $7,500 per year, payable at the end of the year. You anticipate net profit of $5,000 in year one, $7,000 in years 2 and 3 and $9,000 in year 4. You anticipate being able to sell the business for $11,000 at the end of year 4 (assume you will hand over the truck rental contract at the same time). 5 marks a. What is the r value you will use in your calculations? b. What is the current value of your costs? c. What is the current value of your expected net profits? d. Is this venture worth pursuing? Calculate the value of this venture to justify your answer Question 35 (5 points) Saved Assumptions and Formula Sheet You are frustrated that you can't get your favourite Starbucks drink during COVID and you decide to start a mobile Joe's Java coffee truck. You decide to rent a truck for four years until you graduate. You borrow $8,000 to equip the truck with the special coffee machines and other equipment. The interest rate on the loan is 5% compounded annuall Rental on the truck is $7,500 per year, payable at the end of the year. You anticipate net profit of $5,000 in year one, $7,000 in years 2 and 3 and $9,000 in year 4. You anticipate being able to sell the business for $11,000 at the end of year 4 (assume you will hand over the truck rental contract at the same time). 5 marks a. What is the r value you will use in your calculations? b. What is the current value of your costs? c. What is the current value of your expected net profits? d. Is this venture worth pursuing? Calculate the value of this venture to justify your answer a. b. C. Saved d Formula Sheet ated that you can get your favourite Starbucks drink during COVID cide to start a mobile Joe's Java coffee truck. You decide to rent a truck years until you graduate. u borrow $8,000 to equip the truck with the special coffee machines and other equipment. The interest rate on the loan is 5% compounded annually. Rental on the truck is $7,500 per year, payable at the end of the year. You anticipate net profit of $5,000 in year one, $7,000 in years 2 and 3 and $9,000 in year 4. You anticipate being able to sell the business for $11,000 at the end of year 4 (assume you will hand over the truck rental contract at the same time). 5 marks a. What is the r value you will use in your calculations? b. What is the current value of your costs? c. What is the current value of your expected net profits? d. Is this venture worth pursuing? Calculate the value of this venture to justify your answer Question 35 (5 points) Saved Assumptions and Formula Sheet You are frustrated that you can't get your favourite Starbucks drink during COVID and you decide to start a mobile Joe's Java coffee truck. You decide to rent a truck for four years until you graduate. You borrow $8,000 to equip the truck with the special coffee machines and other equipment. The interest rate on the loan is 5% compounded annuall Rental on the truck is $7,500 per year, payable at the end of the year. You anticipate net profit of $5,000 in year one, $7,000 in years 2 and 3 and $9,000 in year 4. You anticipate being able to sell the business for $11,000 at the end of year 4 (assume you will hand over the truck rental contract at the same time). 5 marks a. What is the r value you will use in your calculations? b. What is the current value of your costs? c. What is the current value of your expected net profits? d. Is this venture worth pursuing? Calculate the value of this venture to justify your answer a. b. C
