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: 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 Salvage value of equipment                                 $   20,000 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:

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

Salvage value of equipment                                 $   20,000

Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the annual NET savings?

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Annual Net Savings=Annual cash inflow from sales-Annual cash outflow for operating costs

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