Question
Foodies Co. wants to open a new restaurant. The initial setup cost is $1.2 million. The restaurant is expected to generate annual cash flows of
Foodies Co. wants to open a new restaurant. The initial setup cost is $1.2 million. The restaurant is expected to generate annual cash flows of $300,000 for the next 7 years. The company’s required rate of return is 8%.
Requirements:
- Calculate the NPV of the restaurant project.
- Determine the IRR.
- Compute the payback period.
- Assess the profitability index (PI).
- Should Foodies Co. proceed with opening the new restaurant?
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Mathematical Statistics With Applications In R
Authors: Chris P. Tsokos, K.M. Ramachandran
2nd Edition
124171133, 978-0124171138
