Cash flows for each year considering inflation rate

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Reference no: EM132012730

Blue Bottle Coffee has opened a new shop in Brooklyn; the initial investment cost of the shop was $300,000. It will produce $65,000 (in constant dollars) of revenue annually for 4 years. The real MARR is 14% and there will be 2.3% inflation annually.

a) Determine the current cash flows for each year considering the inflation rate (actual dollar cash flows).

b) Find the PW for the investment (using above actual dollar cash flow values

Hint: It would be easier to calculate the PW if you rounded the market MARR DOWN to the nearest whole number.

c) Was the investment worth undertaking? Why?

Reference no: EM132012730

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