What is the npv of this project for the restaurant

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Reference no: EM131085633

Suppose that a local restaurant is trying to evaluate the value of adding a food truck to their business. The restaurant is financed with a bank loan (debt) at 9.00% per year, and has owners (equity) who want a 15.00% annual return on their investment in the business. The owners will raise money for the food truck with a ratio of 50.00% debt and 50.00% equity. The tax rate facing the firm is 34.00%.

The owners have estimated that the food truck will create an annual after-tax cash flow of $75,000.00 for the business. The cost of the food truck will cost $208,729.00 today. The project will be evaluated over a 5-year period.

What is the NPV of this project for the restaurant?

Reference no: EM131085633

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