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You are thinking of starting a pizza delivery business. You would finance 50% of the company with common stock and 50% with debt. Stockholders would
You are thinking of starting a pizza delivery business. You would finance 50% of the company with common stock and 50% with debt. Stockholders would require a return of 8%. Debt with risk similar to your firm has a yield of 7.1006%. You have already paid $200 to a FINA 2710 graduate for a report containing estimates required to analyze the business. Here are the details of that report: Purchase price of delivery vehicle Annual revenue Annual operating costs (gas, insurance, etc.) Tax rate CCA rate for automotive vehicles $5,000 $8,000 $4,000 15.5% 30% .. a) What is the Net Present Value (NPV) of running the business for 3 years if you keep the car after that? b) What is the NPV of running the business for 3 years if you sell the car at the end of the third year for $1,500? (The car is the only asset the business will own) You are thinking of starting a pizza delivery business. You would finance 50% of the company with common stock and 50% with debt. Stockholders would require a return of 8%. Debt with risk similar to your firm has a yield of 7.1006%. You have already paid $200 to a FINA 2710 graduate for a report containing estimates required to analyze the business. Here are the details of that report: Purchase price of delivery vehicle Annual revenue Annual operating costs (gas, insurance, etc.) Tax rate CCA rate for automotive vehicles $5,000 $8,000 $4,000 15.5% 30% .. a) What is the Net Present Value (NPV) of running the business for 3 years if you keep the car after that? b) What is the NPV of running the business for 3 years if you sell the car at the end of the third year for $1,500? (The car is the only asset the business will own)
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