Question
You have decided to get into the cotton candy business. A new cotton candy machine will cost $3260 plus $400 shipping. You will have to
You have decided to get into the cotton candy business.
A new cotton candy machine will cost $3260 plus $400 shipping.
You will have to pay an electrician $60 to hook it up.
Initial inventory expenses will be $600.
You expect the machine to return revenues of $3000 each year. Operating expenses should be $750 annually.
You will have to purchase a new sugar basket (cost $100) every year after the first year.
You expect the to use the machine for three years then sale it for $1000.
The machine is depreciated over four years using the straight line depreciation method.
Your tax rate is 40% and the company's required return on investment is 10%
(5pts)
Compute the Initial Outlay. | $4,320 $1,048 $1,722 $2,178 $1,368 $1,572 $3,234 $1,769 |
Compute the Cashflows for year one. | $4,320 $1,048 $1,722 $2,178 $1,368 $1,572 $3,234 $1,769 |
Compute the non-operating cash flows | $4,320 $1,048 $1,722 $2,178 $1,368 $1,572 $3,234 $1,769 |
Compute the cash flows for year three (OPERATIONAL AND NON OPERATIONAL). | $4,320 $1,048 $1,722 $2,178 $1,368 $1,572 $3,234 $1,769 |
Compute the NPV. (You're gonna need year 2 for this) | $4,320 $1,048 $1,722 $2,178 $1,368 $1,572 $3,234 $1,769 |
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