Question: Susan is considering opening a craft store. She would need $60,000 to remodel and furnish the store and another $30,000 for inventories and other working

Susan is considering opening a craft store. She would need $60,000 to remodel and furnish the store and another $30,000 for inventories and other working capital needs. Rent on the building used by the business will be $10,000 per year. Susan estimates that the annual cash inflow from the business will amount to be $44,000. In addition to building rent, other annual cash outflows for operating costs will amount to $17,000. Susan plans to operate the business for only six years. She estimates that the furnishings could be sold at that time for about $2 ,000. Susan requires a 5.5% return on this investment. Calculate the NPV.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The NPV or Net Present Value is a metric that financial analysts and investors often use to find out ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!