Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

this last one is worth 3 points ) You are thinking of opening an internet coffee shop and estimate the following cash flows. The cost

this last one is worth 3 points) You are thinking of opening an internet coffee shop and estimate the following cash flows. The cost of the establishment is $1.200,000 for the building and $250,000 for equipment. The business will earn $842,000 per year in reve-nue and have cash expenses of $538,000 per year during its five years of operation. De-preciation on the building and equipment will be $80,000 per year. At the end of five years you expect to sell the coffee shop for an after-tax cash disposition value of $600,000. No other cash flows will occur during the 5 years of operation. Using a 25 per-cent tax rate, and a 9 percent cost of money, what is the net present value of this busi-ness?

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

More Books

Students also viewed these Accounting questions