A store will cost $750,000 to open. Variable costs will be 38% of sales and fixed costs are $250,000 per year. The investment costs will be depreciated straight-line over the 19 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 25%. Find the operating cash flow each year if sales revenue is $750,000 per year. Enter your response below. Correct response: 171, 118.42+ - 10Using an operating cash flow of 171, 118.42, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. 591, 447.64 Correct response: 591, 447.65 + 100 Find the net present value break - even level of sales revenue Enter your response below.

A store will cost $750,000 to open. Variable costs will be 38% of sales and fixed costs are $250,000 per year. The investment costs will be depreciated straight-line over the 19 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 25%. Find the operating cash flow each year if sales revenue is $750,000 per year. Enter your response below. Correct response: 171, 118.42+ - 10Using an operating cash flow of 171, 118.42, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. 591, 447.64 Correct response: 591, 447.65 + 100 Find the net present value break - even level of sales revenue Enter your response below.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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