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You are thinking of opening an internet coffee shop and estimate the following cash flows.
. You are thinking of opening an internet coffee shop and estimate the following cash flows. The cost of the establishment is $320,000 for the building and $185,000 for equipment (tax life of 5 years) and both are placed it into service on January 1. The business will earn $16,000 per week in revenue and have cash expenses of $7,000 per week during its eight years of operation. Assume a 50-week year. The building and equipment will be sold for an after tax cash disposition value of $220,000 at the end of the 8th year. No other cash flows will occur during the 8 years of operation. Using a 23 percent tax rate, and a 7 percent cost of money, what is the net present value of this business?
