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Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $1,000,000. Helga has used past financial information
Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $1,000,000. Helga has used past financial information to estimate that the net cash flows (cash inflows less cash outflows) generated by the restaurant would be as follows: Years 1-6 7 8 9 10 Amount $ 100,000 90,000 80,000 70,000 60,000 If purchased, the restaurant would be held for 10 years and then sold for an estimated $900,000. Required: Determine the present value, assuming that Helga desires a 10% rate of return on this investment. (Assume that all cash flows occur at the end of the year) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1
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