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1. Tawanna is considering starting a small business. She plans to purchase equip

ID: 2750484 • Letter: 1

Question

1. Tawanna is considering starting a small business. She plans to purchase equipment costing $149,000. Rent on the building used by the business will be $26,000 per year while other operating costs will total $32,400 per year. A market research specialist estimates that Tawanna's annual sales from the business will amount to $96,000. Tawanna plans to operate the business for 6 years. Disregarding the effects of taxes, what will be the amount of annual net cash flow generated by the business?

1. 37,600   2. 58,400   3. 96.000    4. none are correct

Explanation / Answer

Sale revenue $ 96,000 Less: Operating costs $ 32,400 Rent on building $ 26,000 Annual net cash flows generated $ 37,600