Weasley's Exterminators runs a chain pest control service centers. Analysts predict that if the company opens a location in a new city, it will cost $900,000 up front and generate free cash flow as follows: Year 1, $60,0000; Year 2, $70,000; year 3 $80,000. After year three, the free cash flows will grow forever at a 3% rate. Weasley's cost of capital is 9%. What is the NPV of opening up a new location? What is the present value today of all cash flows that a new location will generate from year four and beyond? What percentage of the project's total cash inflows?

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of opening up a new location for Weasleys Exterminators well ... View the full answer