John livingston is looking into the possibility of buying

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Q. John Livingston is looking into the possibility of buying several coin-operated vending machines also placing them in the local hospitals. Each machine costs $2000, which he will depreciate on a straight-line basis over 8 years. The machine will dispense Coke cans at 75 cents each also Coca Cola Company will replenish them at 40 cents each. Each machine is expected to sell 1500 ca ns a month. The hospitals will provide the space also electricity for the machines for $200 a month at the end of every month. The tax rate of John Livingston is 25% also the after tax cost of capital 12%. Assume that the income also bills occur at the end of each month, but the taxes are paid annually. Should John Livingston get into this venture?

Reference no: EM1320394

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