A venture group is contemplating investment in either of the following projects: a. Establish a cosmetic store with an initial cost of $100,000 and an annual net income of $20,000; the business is estimated to have a resale value of $300,000 after a four-year life. b. Take over a beauty parlor with an $80,000 initial payment and an annual net income of $25,000 for four years. The lease will end at the end of the four years with no obligation on either side. He will pay you $2,000 to make him a recommendation based on sound economic analysis. What would you recommend? (Assume an interest rate of 8%.)

Answer rating: 100% (QA)

Using net present worth aInitial cost100000 Annual net income20000 Resale value 300000 Lifespan 4 y... View the full answer