Raphael Restaurant is considering the purchase of a $27,900 souffl maker. The souffl maker has an economic
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Question:
Raphael Restaurant is considering the purchase of a $27,900 soufflé maker. The soufflé maker has an economic life of 9 years and will be fully depreciated by the straight-line method. The machine will produce 1,980 soufflés per year, with each costing $1.4 to make and priced at $9. Assume that the discount rate is 14 percent and the tax rate is 34 percent. |
Required: | |
(a) | What is the operating cash flow of the project? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)) |
OCF | $ |
(b) | What is the NPV of the project? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) |
NPV | $ |
(c) | Should Raphael make the purchase? |
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date: