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Your bank is planning to open a new branch in a nearby community. Given the following information, please calculate the NPV of the new branch
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Your bank is planning to open a new branch in a nearby community. Given the following information, please calculate the NPV of the new branch net cash flows, and decide if the bank should open this branch.
Initial cost of banking facility $2,800,000.00 Initial other organizing expenses $150,000.00 Year 1 revenue $350,000.00 Year 1 operating expense $180,000.00 Annual growth rate in revenues 6.00% Annual growth rate in expenses 2.00% Required annual rate of return 11.00% Life of Branch Office Years 25.00
$250,000, Yes
$180,000, NO
$80,109, YES
$3,030,109, NO
Your bank is planning to open a new branch in a nearby community. Given the following information, please calculate the NPV of the new branch net cash flows, and decide if the bank should open this branch.
| Initial cost of banking facility | $2,800,000.00 | ||
| Initial other organizing expenses | $150,000.00 | ||
| Year 1 revenue | $350,000.00 | ||
| Year 1 operating expense | $180,000.00 | ||
| Annual growth rate in revenues | 6.00% | ||
| Annual growth rate in expenses | 2.00% | ||
| Required annual rate of return | 11.00% | ||
| Life of Branch Office | Years | 25.00 |
| $250,000, Yes | ||
| $180,000, NO | ||
| $80,109, YES | ||
| $3,030,109, NO |
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