Your mom has started a new business that owns a building. She would like some insights on how she sh Show more Your mom has started a new business that owns a building. She would like some insights on how she should evaluate new opportunities. She has $500000 in funds to use. Looking at her business you discover the following opportunities: Insulate her building at a cost of $120000. This saves 10000 gallons of fuel per year. Fuel currently costs $3.00 per gallon. Planning horizon is eight years. Pay off a $380000 capital equipment loan that has an interest rate of 7% and a maturity of 8 years. Lend another entrepreneur $120000. This person who she met at a local entrepreneur center event promises to double her $120000 in 8 years. Repay her car loan for her recently acquired Jaguar. She borrowed $120 000 for 5 years at 3.9% interest to buy this car. She can sell this car today for $97000 (losing approximately $23000 but saving on interest expenses). So your friend would like some pre-tax advice (that means do not consider taxes or depreciation) on what and how to decide. You can also ignore inflation in your calculations. Again she has $500000 to use in this set of decisions. Make a recommendation that is supported by your calculations. Show less
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