Question: A store will cost $875,000 to open. Variable costs will be 46% of sales and fixed costs are $180,000 per year. The investment costs will

A store will cost $875,000 to open. Variable costs will be 46% of sales and fixed costs are $180,000 per year. The investment costs will be depreciated straight-line over the 6 year life of the store to a salvage value of zero. The opportunity cost of capital is 5% and the tax rate is 30%. Find the operating cash flow each year if sales revenue is $650,000 per year. Enter your response below, 67499.99 Correct response: 163,450410 Click "Verify" to proceed to the next part of the question. Using an operating cash flow of 163,450, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. -45378.13 Correct response: -45,378.134100 Open store Do NOT open store Correct response: Do NOT open stor Click "Verify" to proceed to the next part of the question. Find the net present value break-even level of sales revenue Enter your response below. Number Click "Verify" to proceed
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
