A successful food truck owner is considering whether to move to a brick-and-mortar store. Her analysis suggests
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A successful food truck owner is considering whether to move to a brick-and-mortar store. Her analysis suggests that doing so would increase future revenues by $20,000 every year (in perpetuity).
(1) What is the present value of the move? Assume an interest rate of 4%.
(2) If the move would cost $400,000 up front, what is the net present value of the move? Therefore, should she take this step?
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