A food chain company is experiencing a capacity shortage problem, being very famous brand of fast food. The company is planning to open a new outlet in Sohar, which would require initial investment of $ 220,000. Information on the expected revenues and costs (salaries of staff, rent and other expenses) for next years is given below:
|
Year |
Expected revenue ($) |
Expected Annual Costs ($) |
|
2020 |
64000 |
21000 |
|
2021 |
76000 |
24000 |
|
2022 |
85000 |
26000 |
|
2023 |
94000 |
30000 |
|
2024 |
108000 |
32000 |
|
2025 |
102000 |
36000 |
|
2026 |
116000 |
41000 |
The applicable interest rate is 9% per annum and it is compounded annually.
a) Prepare a cash flow diagram for the given data.
b) Compute the NPW of the future cash flows.
c) Compute the FW at the end of 2026 of given cash flows.
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A food chain company is experiencing a capacity shortage problem, being very famous brand of fast...