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    Present Value Problem

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    ABC Comnpany is considering a proposal to open new stores throughout the U.S. In 2012. They plan to initially open 100 of these in 2012, and then each year thereafter open 25% more than the previous year. (It is acceptable that in some years, fractions of centers would be opened.) Each store will cost $150,000 and will result in revenues of $175,000. A one-time investment of $1,000,000 will be needed in the present year to get the venture started. If the discount rate is 10%, what would the present value of this proposal for a five year time span. All taxes, depreciation, salvage value, cash flow, etc. can be ignored (they will be considered in the second half of the course)

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    ABC Comnpany is considering a proposal to open new stores throughout the U.S. In 2012. They plan to initially open 100 of these in 2012, and then each year thereafter open 25% more ...

    Solution Summary

    The solution helps in calculating Present Values. One time investments for a present year are determined. The discount rate is 10%.

    $2.19