Solution-Compute the net cash flow for each year

Compute the net cash flow for each year

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Reference no: EM132516617

Spartan Stores is expanding operations with the introduction of a new distribution center. The estimated cost of building the new distribution center is estimated at $6.5 million. Working capital investment required is an additional $500,000. As a result of this new distribution center, Spartan expects an increase in net cash flow of $1,200,000 per year for the next 6 years. After 6 years, the distribution center can be sold for $4 million. Spartan requires all new investments to generate a return of 12%.

Question 1. Compute the net cash flow for each year.

Question 2. Assess the investment by computing payback and NPV.

Reference no: EM132516617

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Compute the net cash flow for each year

Reference no: EM132516617

Reference no: EM132516617

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