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You are the owner of a small motel. You are considering two options in an effort to increase your profitability. You could add additional guest
You are the owner of a small motel. You are considering two options in an effort to increase your profitability. You could add additional guest rooms or you could add a food service operation. Either option will cost $500,000. The projected cash in-flows for the next 10 years are listed below. Calculate using the 10% NPV. Which option is better? Years 1 2 3 NO OOO 5 6 7 8 9 10 Rooms 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 Food 40,000 70,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 250,000
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