In my opinion a tanning salon would be a natural addition

Reference no: EM13600901

In my opinion, a tanning salon would be a natural addition to our spa and very popular with our customers," said Stacey Winder, manager of the Lifeline Spa. Our figures show that we could remodel the building next door to our spa and install all of the necessary equipment for $330,000. I have contacted tanning salons in other areas, and I am told that the tanning beds will be usable for about nine years. I am also told that a four-bed salon such as we are planning would generate a cash inflow of about $80,000 per year after all expenses."

Assume that Ms. Winder will not open the salon unless it promises a return of at least 14%. Compute the amount of annual cash inflow that would provide this return on the $330,000 investment.

Reference no: EM13600901

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