Question
.Youare thinking of opening an internet coffee shopand estimate the following cash flows.The cost of the establishment is$320,000 for the building and $185,000 for equipment
.Youare thinking of opening an internet coffee shopand estimate the following cash flows.The cost of the establishment is$320,000 for the building and $185,000 for equipment (tax life of 5 years) andboth areplacedit into service on January 1. Thebusiness will earn$16,000 per week in revenue andhavecash expenses of$7,000 per weekduring its eight years of operation. Assume a 50-week year. The building and equipment will be sold for anafter taxcash disposition value of$220,000 at the end of the8thyear. No other cash flows will occur during the8years of operation. Using a23percent tax rate,and a7percent cost of money,what is the net present valueof this business?
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