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Finance

Suppose that a local restaurant is trying to evaluate the value of adding a food truck to their business. The restaurant is financed with a bank loan (debt) at 9.00% per year, and has owners (equity) who want a 17.00% annual return on their investment in the business. The owners will raise money for the food truck with a ratio of 63.00% debt and 37.00% equity. The tax rate facing the firm is 30.00%.

The owners have estimated that the food truck will create an annual after-tax cash flow of $75,000.00 for the business. The cost of the food truck will cost $200,458.00 today. The project will be evaluated over a 5-year period.

What is the NPV of this project for the restaurant?

Answer Format: Currency: Round to: 2 decimal places.

What is the IRR of this project?

Answer Format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92873421

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