(Chapter 8) The James Family is considering setting up a private winery business. According to the co-CEOs William and Mary James, it appears things are ripe for the pickings to begin this dream of theirs. Their current projections suggest net cash flow of $200,000 per year over the first five years of operations (ordinary annuity). The project requires and initial investment of $600,000.

a. If the James require a return of 9 percent should the winery business be started?

b. Since this is their first business venture, William and Mary are somewhat unsure about their cash flow projections. What is the minimum cash flow that will enable them to break-even even given their desire for a required rate of return of 9 percent on their investment?