What is the net present value of this business

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Reference no: EM132828919

Question - You are thinking of opening an internet coffee shop and estimate the following cash flows. The cost of the establishment is $1.200,000 for the building and $250,000 for equipment. The business will earn $842,000 per year in revenue and have cash expenses of $538,000 per year during its five years of operation. Depreciation on the building and equipment will be $80,000 per year. At the end of five years you expect to sell the coffee shop for an after-tax cash disposition value of $600,000. No other cash flows will occur during the 5 years of operation. Using a 25 percent tax rate, and a 9 percent cost of money, what is the net present value of this business?

Reference no: EM132828919

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