What is the value of the service in today dollars

Assignment Help Finance Basics
Reference no: EM131951583

Question: You are the manager of a grocery store and you are considering an opportunity to offer delivery services to your customers. You estimate that the licensing and set-up costs will amount to $150,000 initially and that you will be spending about $70,000 annually to provide the service (Both figures are net of taxes.) As a result of the service, you expect sales at the store, which are $5 million currently, to increase by 20%. Your after-tax operating margin on new sales is 10%. If your cost of capital is 15%, and you expect the store to remain open for 10 years, what is the value of this service in today's dollars?

Reference no: EM131951583

Questions Cloud

The leaders of the european division of the organization : Many e-commerce companies have entered the market and several enjoy relatively high profit margins, which has lead to immediate financial stability.
Calculate the present value of each of the alternatives : Calculate the present value of each of the alternatives below, if the discount rate is 12%. $45,000 today in one lump sum.
Theory of charisma described as a double-edge sword : Why is the theory of charisma described as a double-edge sword? Please identify a leader that used charisma in a negative manner?
What would the implications for the market policy : In settings where the expansion of the market is so small that a given product or brand cannot reasonably be expected to be provided.
What is the value of the service in today dollars : You are the manager of a grocery store and you are considering an opportunity to offer delivery services to your customers.
Drawbacks of the scientific management approach : Explain the drawbacks of the scientific management approach. Explain the drawbacks of the scientific management approach.
Conduct a brief swot analysis for steigs clinic : Conduct a brief SWOT analysis for Steig's Clinic's walk-in clinic in today's health care environment.
Discuss a public health change made on the local level : Discuss a Public Health (PH) change made on the local or state level based on the collection of behavioral health information.
Team development and punctuated equilibrium model : 1. What are the differences between the five-stage model of team development and the punctuated equilibrium model?

Reviews

Write a Review

Finance Basics Questions & Answers

  Give stakeholder analysis of facebook

Give stakeholder analysis of Facebook? (who are stakeholder and what they expect and how facebook meeting their needs?)

  What is a dividend reinvestment plan drip and how does it

what is a dividend reinvestment plan drip and how does it

  Calculating future values to receive money

Calculating Future Values. You are scheduled to receive $13,000 in two years. When you receive it, you will invest it for six more years at 7.5 percent.

  After they retire they will invest wealth more

christy and michael are trying to decide if they will have enough money to retire early in 15 years at age 60. their

  Justify the term bond valuation

Justify the term Bond valuation where would sell for a premium if interest rates were below 9 percent and would sell for a discount if interest rates were greater than 11 percent

  How much would a business have to invest in a fund

How much would a business have to invest in a fund to receive $12,000 at the end of every month for 7 years? The fund has an interest rate of 4.50% compounded.

  What is the amount to use as the annual sales figure

What is the amount to use as the annual sales figure when evaluating this project?

  What is your net position in terms of present value

You are a swap dealer and you have the following deals on your book: Long 2-year receiver vanilla interest-rate swap, at 6.75% p.a. 30/360. USD N = 50 million.

  How can cios lead their company information business

What are key ways that CIOs can improve the connection with others in the organization to align IT practices and promote enhanced performance?

  Percy cost of common equity

Percy motors has a target capital structure of 40% of debt and 60% of common equity, with no preferred stock. The pre tax cost of debt is 9% and it's corporate tax rate is 40%. Percy CFO estimate that the companys WACC After tax is 9.96%. What is ..

  What does warren buffett seem to fear most about financial

In his 2002 letter to shareholders, what does Warren Buffett seem to fear most about financial derivatives?

  A group of concerned citizens in a small town are

a group of concerned citizens in a small town are organizing against fracking. even though fracking promises to

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