Researching an expansion of business to serve coffee

Assignment Help Macroeconomics
Reference no: EM132507032

With an initial outlay of $50,000, Phil's Tavern is researching an expansion of their business to serve coffee and breakfast sandwiches. The owner expects to see their money returned within 3 years and estimates a required rate of return of 16%, which appears high but they feel it is justified given the success of the rest of their business. With the following projected free cash flows, should the owner proceed with the investment? Use NPV and IRR to explain your answer.

IO = $50,000

FCF Year 1 = $30,000

FCF Year 2 = $25,000

FCF Year 3 = $10,000

NPV =

IRR =

Reference no: EM132507032

Questions Cloud

What is the value of the firm : If the rd is 12%, the rsU= 16% and the corporate tax rate is 40%, then what is the value of the firm (VL) according to MM with corporate taxes?
What is the npv of the project : Taking into account the costs of external financing, what is the NPV of the project?
Compute the amount of cash received from total sales : the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales during the month of May.
What is the npv of expansion : A retail coffee company is planning to open 100 new coffee outlets that are expected to generate, in total, $15 million in free cash flows per year
Researching an expansion of business to serve coffee : With an initial outlay of $50,000, Phil's Tavern is researching an expansion of their business to serve coffee and breakfast sandwiches. The owner expects
When using ratio analysis and why is it so important : When using ratio analysis, why is it so important? Do we use it for example just to track our numbers based on our past performance
TOPIC - Has US Army maintained its status as a profession : TOPIC - Has the US Army maintained its status as a profession? Argue why or why not. Give at least one example to support your argument
Estimate the fixed and variable components : If the number of machine hours in September was 4,250, what would be the prediction of total maintenance department costs for the month?
What is the hedge ratio : (a) What is the hedge ratio? (b) How many Treasury bond futures should be purchased/sold to hedge the bond?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Write an essay about actions by us governments at all levels

Write an essay about Actions by US governments at all levels and the Federal Reserve to deal with the collapse of tax revenues, increased unemployment and severe banking illiquidity associated with the financial crisis and recession.

  What range of payments will the farmer accept

What are the highest and lowest payments from the writer that the beekeeper- farmer team will accept for the sixth day?

  Difference between two in terms of variables

Economics is divided into microeconomics and macroeconomics. What is the difference between the two in terms of the variables used in each study?

  Mediaville spend all of their income on books

Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400

  Example on nash equilibrium

The domestic supply curve is P=30+0.5Q. The world price for lithium batteries is $40. If the quota is set for 20 units, what is the deadweight loss from the quota?

  Detracts from the website

What a Java® applet is The URL of a Java® applet you found Why you feel this Java® applet enhances or detracts from the website

  Liabilities have changed from the day before

Suppose the assets of the Silver Lode Bank are $100,000 higher than on the previous day and its net worth is up $40,000. By how much and in what direction must its liabilities have changed from the day before?

  1 economists are fond of saying that there is no free lunch

1. economists are fond of saying that there is no free lunch. what concept supports this belief?2. name two opportunity

  Eluciadte the law of demand

Eluciadte the law of demand. Why does a demand curve slope downward. How is market demand curve derived from individual demand curves.

  Does a movie or a book have a higher fixed cost of productio

Frequent moviegoers often note that movies are rarely based on original ideas. Most of them are based on a television series, a video game, or, most commonly, a book.

  Q1 nbspbriefly define the following termsanbspnbspnbsp

q.1 nbspbriefly define the following termsa.nbspnbspnbsp unemployment rate be sure to give the definition of the

  What is the mps and the multiplier

According to the classicals, deviations from full employment are due to adjustments from shifts in the labor supply and demand curves. These shifts were discussed in chapters 8 and 9. Why do Keynesians argue this point - Determine the slope of thi..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd