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W ILDWUBISRvcxGZ?projector=1&messagePartid=0.1 aps Update Apple ID Sets Some account services available until you sign You are considering opening a fishing lodge near Prince Rupert. You
W ILDWUBISRvcxGZ?projector=1&messagePartid=0.1 aps Update Apple ID Sets Some account services available until you sign You are considering opening a fishing lodge near Prince Rupert. You expect start-up costs of $400,000 and ongoing expenses of $30,000 per year. You expect revenues of $40,000 in the first year and $70,000 per year after that. You plan to sell the business at the end of 5 years for $500,000. Assume all expenses are paid at the beginning of the year and revenues are received at the end of the year. Time diagram required. a) Draw the time diagram. [3 marks] b) If you were to borrow the money to finance the project, what would be the highest interest rate you would be willing to pay? [3 marks) c) In order to make your business worthwhile you feel you require a 12% rate of retum. Calculate the NPV for the investment. Should you open the fishing lodge? Why or why not? [4 marks)
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