Bronze It Tanning Salon expects annual sales of $1,175,000, annual fixed cash outlays are $586,000 a year at each location, variable cash outlays are 12 percent of sales, depreciation is $115,000 per year, and taxes are 32% (of pretax income). Initial outlay for the building is $2,140,000. The company does its analysis based on a 20-year store life. We believe the business can be sold for $580,000 after taxes at the end of its 20 year operating life. 1. Using an 12% required return, what is the net present value of this venture? 2. Please rework the prior problem to determine the net present value level of annual sales volume that is needed to generate a net present value of $0?
Bronze It Tanning Salon expects annual sales of $1,175,000, annual fixed cash outlays are $586,000 a year at each location, variable cash outlays are 12 percent of sales, depreciation is $115,000 per year, and taxes are 32% (of pretax income). Initial outlay for the building is $2,140,000. The company does its analysis based on a 20-year store life. We believe the business can be sold for $580,000 after taxes at the end of its 20 year operating life. 1. Using an 12% required return, what is the net present value of this venture? 2. Please rework the prior problem to determine the net present value level of annual sales volume that is needed to generate a net present value of $0?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Bronze It Tanning Salon expects annual sales of $1,175,000, annual fixed cash outlays are $586,000 a year at each location, variable cash outlays are 12 percent of sales,
1. Using an 12% required return, what is the
2. Please rework the prior problem to determine the net present value level of annual sales volume that is needed to generate a net present value of $0?
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