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.
Submitting your assignment in APA format means, at a minimum, you will need the following:
- Title slide: Remember the running head. The title should be in all capitals.
- Length: 15 slides minimum
- Body slides: This begins on the slide following the title slide and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics, except as required for APA-level headings and references. The deliverable length of the body of your presentation for this assignment is 15 slides. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
- Reference slide: References that align with your in-body academic sources are listed on the final slide of your presentation. The references must be in APA format using appropriate spacing, hanging indent, italics, and uppercase and lowercase usage as appropriate for the type of resource used. Remember, the Reference slide is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.