Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are the owner of a small bar, The World, and you are considering opening a bakery in a vacant area in the back of

You are the owner of a small bar, The World, and you are considering opening a bakery in a vacant area in the back of the store. You estimate that it will cost you $54,813.00 to set up the bakery and that you will generate $10,879.00 in after-tax cash flows in for the life of the store (which is expected to be 10 years.) The one concern you have is that you have limited parking; by opening the bakery you run the risk of not having enough parking for customers who enjoy your bar. You estimate that the lost sales would amount to $3,486.00 per year and that your after-tax operating margin on sales at the bar is 52.00%. If your discount rate is 15.00%, what is the NPV of opening the bakery?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions