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Expected cash flows

Stayner Catering is considering setting up a temporary division to handle demand created by a special tourist promotion being made by City of Toronto during the coming year. They will invest in tables, serving equipment and trucks for a one-year period. Labour is employed on a monthly basis. Warehouse space is rented monthly, and revenue is generated monthly. The items purchased will be sold at the end of the year, but the salvage values are somewhat uncertain. Given in the attached file (Cash Flows.doc) are the known or expected cash flows for the project.

For an interest rate of 12% compounded monthly, create a spreadsheet that calculates and graphs the present worth of the project for a range of salvage values of the purchased items from 0% to 100% of the purchase price. Should Stayner Catering go ahead with this project?

Please put all results and graphs in a Word file and show all intermediate calculations because Excel is hard to read sometimes. But include both the Excel and Word file. Thanks!


Solution Summary

Determine expected cash flows.