nja Jensen is idering the purchase of a fast food franchise Sonja will be operating on a lot that is to be converted into a

Question

nja Jensen is idering the purchase of a fast food franchise Sonja will be operating on a lot that is to be converted into a parking lot in six years but that may be rented in the interim for 800 per month The franchise and necessary equipment will have a total initial cost of 52 000 and a salvage value of 8 000 in today s dollars after six years Sonja is told that the future annual general inflation rate will be 5 The projected operating revenues and expenses in actual dollars other than rent and depreciation for the business are given in the table below Assume that the initial investment will be depreciated under the five year MACRS and that Sonja s tax rate will be 30 Sonja can invest her money at a rate of at least 13 in other investment activities during this inflation ridden period Click the icon to view the projected operating revenues and expenses Click the icon to view the MACRS depreciation schedules a Determine the cash flows associated with the investment over its life Fill in the table below Round to the nearest dollar Period 0 1 Net Cash Flow Actual Dollars

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