Your neighborhood laundromat is for sale and a friend is considering investing in the business....
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Your neighborhood laundromat is for sale and a friend is considering investing in the 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%. What is the net present value of this project? Calculate the simple payback period for this project. How would you evaluate this investment? What would be a good price at which to purchase this business?
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