Dorothy is considering a new part-time business venture where she would monogram linens and other items. To do this, she would need to upgrade her current sewing machine. Here is what she quickly threw together as an estimate: $890 (purchase price of $1,090 less $200 trade-in value of current machine) $6,300 per year 30 % of sales $1,080 (for marketing efforts; no new operating expenses thereafter) Cost to upgrade machine today Annual sales potential COGS Operating expenses in year 1 She plans to use the sewing machine only for business purposes and expects it to have a 4-year useful life, at which time it will have a salvage value of $210. Click here to view the factor table (a) a Your answer is partially correct. When Tax Rate Outline the appropriate cash flows, timing, adjustment for taxes, and PV factor for each component of this business venture, assuming Dorothy reaches her estimates as listed above for 4 years. Assume an 9% discount rate and an applicable tax rate of 20%. (Round present value factor answers to 5 decimal places, e.g. 1.25124. Round tax rate and present values to 2 decimal places, e.g. 0.15 or 125.25

Answer rating: 100% (QA)

To calculate the present value of the cash flows for Dorothys business venture we need to consider t... View the full answer