A store will cost $725,000 to open. Variable costs will be 43% of sales and fixed costs are $180,000 per year. The investment costs will be depreciated straight-line over the 19 year life of the store to a salvage value of zero. The opportunity cost of capital is 12% and the tax rate is 40%.

Find the operating cash flow each year if sales revenue is $600,000 per year.

Correct response: 112,463.1610

Using an operating cash flow of 112,463.16, calculate the Net Present Value. Should the store be opened?

Enter your response for net present value below.

Correct response: 103,378.53100

Do NOT open store

Open store

Correct response: Open store

Answering: Find the net present value break-even level of sales revenue

Enter your response below.

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