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Category > Business & Finance Posted 10 Jun 2017 My Price 12.00

You are thinking about opening a car dealership.

You are thinking about opening a car dealership. You bought some real estate last year for $700,000 which you will use for the dealership. The market value of this real estate today is $1,200,000. To build the necessary showroom and shop it will cost you $600,000, a cost which you will depreciate over 3 years. You estimate an increased need for net working capital in year zero in the amount of $40,000 which will be recovered at the end of the project. From your dealership you expect to generate annual revenues of $800,000 and have operating expenses of $200,000, and you have a 30% tax rate. Bank of America has offered to lend you $850,000 at an interest rate of 6% to be repaid over 5 years. If your cost of capital (discount rate) is 10% what is the net present value of this project? ***Please show work***

Possible Answers:

1223742

-790338

-616258

-676364

533742

-360000

Answers

Homework Helper
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Status NEW Posted 10 Jun 2017 09:06 AM My Price 12.00

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