Willing to determine the maximum amount of cash Molly should be willing to pay f

Question

Willing to determine the maximum amount of cash Molly should be willing to pay for a drink machine. Explain the consistency or lack of consistency in the answers to Requirement a versus Requirement h. Misty Higgins, manager of the Hass Music Hall, is considering the opportunity to expand the company's concession revenues. Specifically, she is considering whether to install a popcorn machine. Based on market research, she believes that the machine could produce incremental cash inflows of $3,200 per year. The purchase price of the machine is $8,500. It is expected to have a useful life of three years and a $2,500 salvage value. Ms. Higgin has established a desired rate of return of 16 percent. Calculate the net present value of the investment opportunity. Should the company buy the popcorn machine? Nixon Holiday has decided to start a small delivery business to help support himself while Holiday expects demand for delivery services to grow steadily as customer.

Explanation / Answer

PMT 3200 no of period 3 Fv 2500 rate 16% PV $8,788.49 initial cost -8500 NPV $288.49

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