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Someone has approached you to rent your bar space for a private Super Bowl party. They...

Someone has approached you to rent your bar space for a private Super Bowl party. They will pay you $100/month each of the next 12 months following the Super Bowl. Does this bring you more profit than opening your bar for the Super Bowl? Use NPV to evaluate. Annual interest rate is 12%

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Expert Solution

The NPV of rent for the next 12 months is $1,125.5. If profits from opening our own bar is expected to be higher than the NPV of rent received, we should go ahead with opening our own bar, and vice versa.

jeff jeffy answered 1 year ago
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