Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the annual NET savings?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the annual NET savings?
Cost of equipment
$175.000
Working capital needed
$185,000
Annual cash inflow from sales
$190.000
Annual cash outflow for operating costs
$145,000
$ 20,000
Salvage value of equipment
Transcribed Image Text:Cost of equipment $175.000 Working capital needed $185,000 Annual cash inflow from sales $190.000 Annual cash outflow for operating costs $145,000 $ 20,000 Salvage value of equipment
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