Question: 4. Use the following data to answer the next THREE questions: Molly is considering opening a Campus Delivery business. The initial investment for the business
4. Use the following data to answer the next THREE questions: Molly is considering opening a Campus Delivery business. The initial investment for the business is $200,000, which includes purchasing delivery vehicles and other investments. For tax purposes, the projected salvage value of the delivery vehicles is $62,000. The government requires depreciating the vehicles using the straight-line method over the business's life of 5 years. Molly is trying to estimate the net cashflows after tax for this business. She has already figured out that the business will generate an annual after-tax cash inflow of $54.000 from the operation. She now needs your help to estimate the net cash intlow that she will receive from selling the delivery vehicles at the end of 5 years Book 1. In the best-case scenario, Molly can sell the vehicles at the end of 5 years for $95,000. Assuming the tax rate of 25%, what is the net after-tax cashflow Molly will receive from selling her delivery vehicles at the end of 5 years? $8,250 O $53,750 erences O $86,750 O $95.000 O $103.250 2. In the worst-case scenario, Molly can sell the vehicles at the end of 5 years for $41,000. Assuming the tax rate of 25%, what is the net after-tax cashflow Molly will receive from selling her delivery vehicles at the end of 5 years? $46.250 O $35.750 O $67.250 $41.000 O $5,250 3. Molly is very optimistic about the sale of the delivery vehicles, and thinks that the best case scenario of selling them for $95.000 will happen. Under this assumption, what is the Internal Rate of Return (IRR) for Molly's delivery business? 20.57% 16.46% O 19.94% 1187% 19.28%
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