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Your younger cousin is about to enter SMU, and she is going to start her own used textbook business while she is in the university.
Your younger cousin is about to enter SMU, and she is going to start her own used textbook business while she is in the university. The business will only last for years. The building will cost $ today to purchase. She expects to sell the building years from now for $ She expects annual revenues of $starting next year: annual revenues at t is $ Her operating costs including salaries, overhead expenses, shelving, etc. will be $ per year. Her working capital level requirements will be $ immediately, $ in the first and second years and $ in the third year. She will not need any working capital at the end of the year four t She asks you for advice regarding this venture...should she do it For simplicity ignore CCA depreciation and assume that she can depreciate the building by $ each year for four years. Assume that the appropriate discount rate for this project is and the corporate tax rate is What is the net present value of this project? Should she do it
Your younger cousin is about to enter SMU, and she is going to start her own used
textbook business while she is in the university. The business will only last for years. The building
will cost $ today to purchase. She expects to sell the building years from now for $
She expects annual revenues of $starting next year: annual revenues at t is $
Her operating costs including salaries, overhead expenses, shelving, etc. will be $ per year.
Her working capital level requirements will be $ immediately, $ in the first and
second years and $ in the third year. She will not need any working capital at the end of the
year four t
She asks you for advice regarding this venture...should she do it
For simplicity ignore CCA depreciation and assume that she can depreciate the building by $
each year for four years. Assume that the appropriate discount rate for this project is and the
corporate tax rate is
What is the net present value of this project? Should she do it
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