Question: A store will cost $950,000 to open. Variable costs will be 37% of sales and fixed costs are $130,000 per year. The investment costs will

A store will cost $950,000 to open. Variable costs will be 37% of sales and fixed costs are $130,000 per year. The investment costs will be depreciated straight-line over the 8 year life of the store to a salvage value of zero. The opportunity cost of capital is 5% and the tax rate is 35%. if sales revenue is $1,000,000 per year.

Using an operating cash flow of 366,562.5, calculate the Net Present Value. Should the store be opened?

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