Your boss has told you to evaluate two ovens for Tink-the-Tinkers, a gourmet sandwich shop. After...

 

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Your boss has told you to evaluate two ovens for Tink-the-Tinkers, a gourmet sandwich shop. After some questioning of vendors and receipt of specifications, you are assured that the ovens have the attributes and costs shown in the following table. The following two assumptions are appropriate: Original Cost Labor per year in excess of larger models Cleaning/maintenance Salvage value Three Small Ovens at $1,250 Each $3,750 $690 (total) $780 ($260 each) $660 ($220 each) Two Large Ovens at $2,400 Each $4,800 $0 $400 ($200 each) $1,000 ($500 each) He is told to assume that a) the life of each oven is 5 years, and b) the company thinks it knows how to make 12% on investments no more risky than this one. a) Using the above, the NPV for Three Small Ovens = $ -8675 (round your response to two decimal places and include a minus sign if the answer is negative). Using the above, the NPV for Two Large Ovens = $ (round your response to two decimal places and include a minus sign if the answer is negative). Your boss has told you to evaluate two ovens for Tink-the-Tinkers, a gourmet sandwich shop. After some questioning of vendors and receipt of specifications, you are assured that the ovens have the attributes and costs shown in the following table. The following two assumptions are appropriate: Original Cost Labor per year in excess of larger models Cleaning/maintenance Salvage value Three Small Ovens at $1,250 Each $3,750 $690 (total) $780 ($260 each) $660 ($220 each) Two Large Ovens at $2,400 Each $4,800 $0 $400 ($200 each) $1,000 ($500 each) He is told to assume that a) the life of each oven is 5 years, and b) the company thinks it knows how to make 12% on investments no more risky than this one. a) Using the above, the NPV for Three Small Ovens = $ -8675 (round your response to two decimal places and include a minus sign if the answer is negative). Using the above, the NPV for Two Large Ovens = $ (round your response to two decimal places and include a minus sign if the answer is negative).

Answer rating: 100% (QA)

To calculate the Net Present Value NPV for each option we need to discount the cash flows associated ... View the full answer