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Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a restaurant business. The truck
Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a restaurant business. The truck including equipment costs $100,000, has an expected useful lifespan of 10 years, and the estimated salvage value then is $5,000. The food truck will require a $20,000 overhaul after 6 years of use. The food truck costs $5000 per year to operate and maintain, but it will save the underlying restaurant operator $40,000 per year in labour and lease payments. As you are contemplating the offer you evaluate the economics of this idea... Your cost of borrowing money is 10%. You set yourself an MARR of 14%. What should you do? Invest or not? a) b) Use a timeline graph outflows and inflows over time. to summarize cash Conduct the ERR analysis. Explain each step of your analysis and related assumptions. Report the level of ERR for this proposal and discuss whether or not you (the decision maker) should invest?
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