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Robert Huft retires in 6 years. He would have to purchase equipment costing $590,000 to equip the outlet. Other outlets in the fast food chain have an annual net cash inflow of about $140,000. Mr. Anders would close the outlet in 6 years. He estimates that the equipment could be sold at that time for about 10% of its original cost. Mr. Huft's required rate of return is 8%

Required:

1. What is the investment's net present value?

2. Is this an acceptable investment?

3. What is the most he should invest?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M949998

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