Jim bingham is considering starting a small catering

Reference no: EM13585835

Jim Bingham is considering starting a small catering business. he would need to purchase a delivery van and various equipment costing $125,000 to equip the business and another $60,000 for inventories and other working capital needs. rent for the building used by the business will be $35,000 per year. jim's marketing studies indicate that the annual cash inflow from the business will amount to $120,000. in addition to the building rent, annual cash outflow for operating costs will amount to $40,000. jim wants to operate the catering business for only six years. he estimates that the equipment could be sold at that time for 4% of its original cost. jim uses a 16% discount rate.Would you advice Jim to make this investment?

Reference no: EM13585835

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