In: Finance
You are considering a coffee shop project. It will cost you $240,000 and you plan to depreciate this cost straight-line over four years to zero. You expect to generate $100,000 in revenues each year from sales. You estimate that it will incur costs of $30,000 each year in your daily operations. There will be an initial requirement for the net working capital of $9,000 which will be required for the life of the business and recovered at the end of the project. 10% is your estimated cost of capital. The tax rate is 30%. What is the NPV and IRR for the project? Should you undertake the business?