Question: A store will cost $ 7 5 0 , 0 0 0 to open. Variable costs will be 5 9 % of sales and fixed

A store will cost $750,000 to open. Variable costs will be 59% of sales and fixed costs are $130,000 per year. The investment costs will be depreciated straight-line over the 18 year life of the store to a salvage value of zero. The opportunity cost of capital is 5% and the tax rate is 40%.
Find the operating cash flow each year if sales revenue is $600,000 per year.
Using an operating cash flow of 86,266.67, calculate the Net Present Value. Should the store be opened?
Find the net present value break-even level of sales revenue.

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