Your neighborhood | Management homework help

 

Your neighborhood laundromat is for sale and a friend is considering  investing in this business. Your friend has asked for your financial  advice regarding this endeavor.

For the business alone and no other assets (such as the building and  land), the purchase price is $250,000. The net cash flows for the  project are $30,000 per year for the next 5 years. The plan is to borrow  the money for this investment at 5%.

You will need to submit a presentation sharing your recommendation. You will need to address the following questions: 

  • What is the net present value of this project? Use the calculations  covered in this week’s Video to calculate the net present value.  
  • Calculate the simple payback period for this project. Your  desired payback period is 5 years. How long is the payback period for  this project?  
  • How would you evaluate this investment? What would be a good price at which to purchase this business?

Prepare the calculations to determine if the laundromat is a good  investment. In a 15 slide presentation, show your calculations and  recommendations on whether to purchase the laundromat. Be sure to  address the questions above in the presentation.