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Jane's Sub Shop is considering investing in toaster ovens for each of its 120 stores located in the southwestern United States. The high-capacity conveyor toaster ovens, manufactured by Lincoln, will require an initial investment of $15,000 per store plus $500 in installation costs, for a total investment of $1,860,000. The new capital (including the costs for installation) will be depreciated over five years using straight-line depreciation toward a zero salvage value. Jane will also incur additional maintenance expenses totaling $120,000 per year to maintain the ovens. At present, firm revenues for the 120 stores total $9 million, and the company estimates that adding the toaster feature will increase revenues by 10%. Jane's weighted average cost of capital is 9%.
a. If Jane faces a 30% tax rate, what expected project FCFs for each of the next five years will result from the investment in toaster ovens?
b. What is the project's NPV? Should the project be accepted?
c. What is the project's IRR? Should the project be accepted?
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On Becca’s 1st birthday, a savings account was opened for her containing $10,000. By her 5th birthday, the account had grown to $13,500 and $1000 was added. By her 13th birthday the account had grown to $17,000 and $2000 was added. Use the time-weigh..
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campc is a 5-year old chain of 12 medium-sized supermarkets. the supermarkets are targeting the middle- and top-income
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