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Sunbucks Inc. is thinking about investing in high-power blenders for each of its 120 coffee shops located in the northwestern of US. The blenders will
Sunbucks Inc. is thinking about investing in high-power blenders for each of its 120 coffee shops located in the northwestern of US. The blenders will require an initial investment of $15,000 per store plus $500 in installation costs, for a total investment of $1,860,000. The new capital (including the costs for installation) will be depreciated over five years using straight-line depreciation toward a zero salvage value. Sunbucks will also incur additional maintenance expenses totaling $120,000 per year to maintain the blenders. At present, firm's yearly revenues for the 120 shops total $7 million, and the firm estimates that adding the toaster feature will increase its existing yearly revenues by 10%. Assume that there is a 30% tax rate and
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