Question

"The owners of a chain of fast-food restaurants spend $60000 installing donut makers in all their restaurants. This is expected to increase cash flows by $13000 per year for the next 5 years. The discount rate is 5.3%. What is the net present value of installing the donut makers?"" Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

Answer 1

Calculation of NPV
		5.30%
Year	Annual Cash flow	PV factor	Present values
0	(60,000)	1.0000	(60,000.00)
1	13,000	0.9497	12,345.68
2	13,000	0.9019	11,724.29
3	13,000	0.8565	11,134.18
4	13,000	0.8134	10,573.77
5	13,000	0.7724	10,041.57
	Net Present Value	(4,180.51)