Assume that your hotel decided to add new menu items to the restaurant's menu. This project will require your hotel to purchase new kitchen equipment. The hotel owners expect all projects conducted in this company to meet the following decision criteria: Payback period < 3 years NPV > $0 IRR > the company’s required rate of return which is 8%. The estimated kitchen equipment cost is $15,000 (Year 0), and incremental cash flows from this project (Year 1-5) are listed in the table. Cash Flow ($) Cumulative Cash Flow ($) Year 0 -15,000 Year 1 10,000 Year 2 3,000 Year 3 3,000 Year 4 300 Year 5 300 15. What is the Net Present Value (NPV) ($)? Note: Do not include $, commas, years, or %, when you type your answers. Round your answer to two decimal places. If your answer is a negative number, you MUST include a negative sign.
Assume that your hotel decided to add new menu items to the restaurant's menu. This project will require your hotel to purchase new kitchen equipment. The hotel owners expect all projects conducted in this company to meet the following decision criteria: Payback period < 3 years NPV > $0 IRR > the company’s required rate of return which is 8%. The estimated kitchen equipment cost is $15,000 (Year 0), and incremental cash flows from this project (Year 1-5) are listed in the table. Cash Flow ($) Cumulative Cash Flow ($) Year 0 -15,000 Year 1 10,000 Year 2 3,000 Year 3 3,000 Year 4 300 Year 5 300 15. What is the Net Present Value (NPV) ($)? Note: Do not include $, commas, years, or %, when you type your answers. Round your answer to two decimal places. If your answer is a negative number, you MUST include a negative sign.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...
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Question
Assume that your hotel decided to add new menu items to the restaurant's menu. This project will require your hotel to purchase new kitchen equipment.
- The hotel owners expect all projects conducted in this company to meet the following decision criteria:
-
- Payback period < 3 years
- NPV > $0
IRR > the company’s required rate of return which is 8%.
-
- The estimated kitchen equipment cost is $15,000 (Year 0), and incremental cash flows from this project (Year 1-5) are listed in the table.
|
|
Cash Flow ($) |
Cumulative Cash Flow ($) |
|
Year 0 |
-15,000 |
|
|
Year 1 |
10,000 |
|
|
Year 2 |
3,000 |
|
|
Year 3 |
3,000 |
|
|
Year 4 |
300 |
|
|
Year 5 |
300 |
|
15. What is the
Note: Do not include $, commas, years, or %, when you type your answers. Round your answer to two decimal places. If your answer is a negative number, you MUST include a negative sign.
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