Opening a restaurant...Buy land for $1MIL, Construct a building for $1mil, buy the equipment $500k. Today,...

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Opening a restaurant...Buy land for $1MIL, Construct a building for $1mil, buy the equipment $500k. Today, we need some startup cash of $250k. To fill our store, we need to build up inventory of $50k. The PP&E can sell (salvage value) for $250k at the end of year 3. Sales for this project will be $500k per year growing at 25% per year. Costs will be 25% of sales per year. Depreciate the asset fully using straight line over the life of the project. Taxes are 20%. What is the NPV of this project? The required rate of return is 13% Opening a restaurant...Buy land for $1MIL, Construct a building for $1mil, buy the equipment $500k. Today, we need some startup cash of $250k. To fill our store, we need to build up inventory of $50k. The PP&E can sell (salvage value) for $250k at the end of year 3. Sales for this project will be $500k per year growing at 25% per year. Costs will be 25% of sales per year. Depreciate the asset fully using straight line over the life of the project. Taxes are 20%. What is the NPV of this project? The required rate of return is 13%

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Anmal sales using growth rate of 25 per year Year 1 sales 500k costs 1251 Year 2 sales ... View the full answer