Bill Anders Accounting Calculations

Question # 00001786 Posted By: expert-mustang Updated on: 09/29/2013 08:10 AM Due on: 09/29/2013
Subject Accounting Topic Accounting Tutorials:
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(Ignore income taxes in this problem.) Bill Anders retires in 8 years. He has $650,000 to invest and is considering a franchise for a fast-food outlet. He would have to purchase equipment costing $500,000 to equip the outlet and invest an additional $150,000 for inventories and other working capital needs. Other outlets in the fast-food chain have an annual net cash inflow of about $160,000. Mr. Anders would close the outlet in 8 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Anders' required rate of return is 16%.

Required:

What is the investment's net present value when the discount rate is 16%?

Is this an acceptable investment?

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Tutorials for this Question
  1. Tutorial # 00001625 Posted By: expert-mustang Posted on: 09/29/2013 08:11 AM
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