Bob is considering buying a small shop on Vancouver Island. He has found a small shop with a purchase price of $420,000. He will need to spend an additional $20,000 immediately for renovations and he plans to sell the business for S600,000 in 15 years. He estimates that his annual expenses will be $8,000 and he anticipates that his revenue will be $15,000 per year. Assume revenue occurs at the end of each year and expenses occur at the beginning of each year What is the initial cash flow CFO?
Bob is considering buying a small shop on Vancouver Island. He has found a small shop with a purchase price of $420,000. He will need to spend an additional $20,000 immediately for renovations and he plans to sell the business for S600,000 in 15 years. He estimates that his annual expenses will be $8,000 and he anticipates that his revenue will be $15,000 per year. Assume revenue occurs at the end of each year and expenses occur at the beginning of each year What is the initial cash flow CFO?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 23P
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Transcribed Image Text:Bob is considering buying a small shop on Vancouver Island. He has found a small shop with a purchase
price of $420,000. He will ieed to spend an additional $20,000 immediately for renovations and he plans to
sell the business for $600,000 in 15 years. He estimates that his annual expenses will be $8,000 and he
anticipates that his revenue will be S15,000 per year. Assume revenue occurs at the end of each vear and
expenses occur at the beginning of each year. What is the initial cash flow CF0?
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