You are about to start a side business while in college. To do so, you just spent $30,000 for a used, fully equipped taco truck. You plan to provide quality food at lunch to construction workers at sites where there is no visible food outlet that is fast, affordable, and offers tasty, zesty lunches. The total AOC is estimated to be $12,000 and gross revenue is expected to be in the range of $20,000 to $30,000 per year. If the truck’s salvage value after 5 years is estimated to be $14,000 and you want a return of 10% per year on your investment, what is the minimum net annual income required to meet your expectation? Is the estimated gross revenue range sufficient?

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Here the required return on investment ROI is 10 of capital Which is the amount spend ... View the full answer