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Your parent offer you the opportunity to invest $ 50,000 in new coffee shop on the existing building on their property. It is located in the city centre. This building has 200m2 of space. Assumed that
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35 votes
35 votes
Your parent offer you the opportunity to invest $ 50,000 in new coffee shop on the existing building on their property. It is located in the city centre. This building has 200m2 of space. Assumed that the project lasts 9 years, opportunity cost of capital is 10%, corporate income tax is ignored.

a. You should make some assumptions and forecast intial investment (cost of reparing old building and purchase of fix assets); operation cash flow (\, price per cup of coffee, number of cups of coffee per year; cost, depreciation, profit and cash flow from operation); and cash flow from changes in working capital.
b. What is NPV of this project? Do you invest this project? Why?

User Stefano Giraldi
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1 Answer

19 votes
19 votes

Answer:

no I don't invest this project

User Ed Orsi
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2.6k points
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