Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are thinking of starting a business producing reuseable face mask that require initial investment of $90,000. You plan to retire 10 years from now,
You are thinking of starting a business producing reuseable face mask that require initial investment of $90,000. You plan to retire 10 years from now, hence will sell the business in 10 years. The annual operating expenses is estimated to be $40,000. You foresee the demand for facial mask is high in the recent years and expect to have annual revenue of $100,000 in the first two years, followed by an annual revenue of $60,000 for the remaining years. After 10 years, the salvage value of equipment at that time is expected to be $40,000. Your MARR is 25% effective. Assume expenses occur at the beginning of each year and revenue at the end of each year. (a) Calculate the payback period. Express your answer in 2 decimal places. (b) Calculate the NPV for the business. Express your answer in 2 decimal places. (c) What is the IRR? Express your answer in percentage and 2 decimal places
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started