Question

Calculate the net present value in US$ of an investment in the health spa only, assuming that the 1,500-square-foot unit is purchased and then resold at the end of 12 years. (Hint: Before making your present value calculations, multiply all amounts expressed in CI$ by $1.25 to convert into US$.)

Answer 1

Answer: Hello I was able to find the Major part of the question online as attached below

answer :

Net present value ( NPV ) = $153353.91

Explanation:

NPV =  ( Present value of Cash Inflow)  - ( Present value of Cash outflow) --  ( 1 )

present value of cash inflow

i) cosmetic products = ( 5500 * 1.25 * 12) * ( 6.8137) (cost of capital )) = 562130.25

ii) land sale = ( 1500 * 300 * 1.25 ) * ( 0.8186 ) ( cost of capital )) = 179212.5

∑ present value of cash inflow = 741342.75

Present value of cash outflow  ( other expenses )

∑ present value of cash outflow = 587,988.84

NPV = 741,342.75  -  587,988.84  = $153,353.91