Ermas beauty supply is considering expanding the existing


Erma's Beauty Supply is considering expanding the existing store. Erma wants to lease the office space next door to her business. Erma must spend, $120,000 on equipment to expand. The equipment is expected to have a zero-salvage value and will be retired in 8 years. Erma expects to increase networking capital by $10,000 right now if she goes through with the expansion. Erma spent $12,000 last month on a survey of the area surrounding the shop to see if there was sufficient demand for a larger store. Erma estimates she will increase revenues by $100,000 per year in the new store for eight years. The direct expenses incurred to make those sales are $65,000, including rent. The lease she is considering signing is for 8 years. She will liquidate the $10,000 networking capital when the lease is complete in 8 years. Erma's Beauty Supply pays 40.0% in taxes, and has a cost of capital of 10.0%. Based on this information, the project's terminal year (year 8) total cash flow is $_______?

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Business Management: Ermas beauty supply is considering expanding the existing
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