Rookie Cookies wants to rent a new bakery space to operate their business at $10,000 a year forthe next 5 years. The rent agreement specifies that a $4,000 security deposit needs to be paid byRookie up-front. In year 4 of the rental agreement, a one-time machinery maintenance fee of$6,000 will need to be paid by Rookie. When the rental agreement expires, Rookie feels they camsell the machinery they maintained during the rental agreement for $7,000. Assuming a 10% raof return, what is the present value (or cost) of the bakery space rental decision?Present Value of a $1Present Value of an Annuity of $1Period10%Period10%0.90910.90920.8260.7510.6830.6213345O-$50,355O-$41,297O-$41,661O-$18,65523451.7362.4873.1703.791

Net present value is the present value of cash inflows less Present value of cash inflows. It is one…

Rookie Cookies wants to rent a new bakery space to operate their business at $10,000 a year for the next 5 years. The rent agreement specifies that a $4,000 security deposit needs to be paid by Rookie up-front. In year 4 of the rental agreement, a one-time machinery maintenance fee of $6,000 will need to be paid by Rookie. When the rental agreement expires, Rookie feels they ca sell the machinery they maintained during the rental agreement for $7,000. Assuming a 10% ra of return, what is the present value (or cost) of the bakery space rental decision? Present Value of a $1 Present Value of an Annuity of $1 Period 10% Period 10% 1 0.909 1 0.909 2 0.826 0.751 0.683 0.621 3 4 5 O-$50,355 O-$41,297 O-$41,661 O-$18,655 2 3 45 1.736 2.487 3.170 3.791

Rookie Cookies wants to rent a new bakery space to operate their business at $10,000 a year for the next 5 years. The rent agreement specifies that a $4,000 security deposit needs to be paid by Rookie up-front. In year 4 of the rental agreement, a one-time machinery maintenance fee of $6,000 will need to be paid by Rookie. When the rental agreement expires, Rookie feels they ca sell the machinery they maintained during the rental agreement for $7,000. Assuming a 10% ra of return, what is the present value (or cost) of the bakery space rental decision? Present Value of a $1 Present Value of an Annuity of $1 Period 10% Period 10% 1 0.909 1 0.909 2 0.826 0.751 0.683 0.621 3 4 5 O-$50,355 O-$41,297 O-$41,661 O-$18,655 2 3 45 1.736 2.487 3.170 3.791

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 56P: Hassad owns a rental house on Lake Tahoe. He uses a real estate firm to screen prospective renters,...

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