Question: A store will cost $1,000,000 to open. Variable costs will be 58% of sales and fixed costs are $190,000 per year. The investment costs will

A store will cost $1,000,000 to open. Variable costs will be 58% of sales and fixed costs are $190,000 per year. The investment costs will be depreciated straight-line over the 9 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 40%. Find the operating cash flow each year if sales revenue is $650,000 per year. Enter your response below. 94244.44 Correct response: 94,244.4410 Click "Verify" to proceed to the next part of the question. Using an operating cash flow of 94,244.44, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. Number O Do NOT open store O Open store A store will cost $1,000,000 to open. Variable costs will be 58% of sales and fixed costs are $190,000 per year. The investment costs will be depreciated straight-line over the 9 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 40%. Find the operating cash flow each year if sales revenue is $650,000 per year. Enter your response below. 94244.44 Correct response: 94,244.4410 Click "Verify" to proceed to the next part of the question. Using an operating cash flow of 94,244.44, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. Number O Do NOT open store O Open store
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
