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) |
||

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