John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66560edc9cfff_93266560edc97a06.jpg)
Transcribed Image Text:
John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $1,000,000. John 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: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Years Amount 1-6 $100,000 7 90,000 8 80,000 9 70,000 10 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 John desires a 10% rate of return on this investment. (Assume that all cash flows occur at the end of the year.) (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Future Amount i = n = Present Value $ 100,000 10% 90,000 10% 80,000 10% 70,000 10% 60,000 10% 900,000 10% Should the restaurant be purchased? John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $1,000,000. John 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: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Years Amount 1-6 $100,000 7 90,000 8 80,000 9 70,000 10 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 John desires a 10% rate of return on this investment. (Assume that all cash flows occur at the end of the year.) (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Future Amount i = n = Present Value $ 100,000 10% 90,000 10% 80,000 10% 70,000 10% 60,000 10% 900,000 10% Should the restaurant be purchased?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Kroger Co., Safeway Inc., and Winn-Dixie Stores, Inc., are three large grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. The balance...
-
A \(2.0 \mathrm{~kg}\) book is lying on a \(0.75-\mathrm{m}\)-high table. You pick it up and place it on a bookshelf \(2.3 \mathrm{~m}\) above the floor. During this process, a. How much work does...
-
Indicate where the following items would appear in the final accounts of a limited company, using 'P' for profit and loss account. 'A' for appropriation account and 'BS' for balance sheet. Some items...
-
The following are selected accounts and account balances of the Sawyer Company on May 31: Debit (Credit) Cash . $12,523 Accounts receivable . 23,052 Inventory .. 16,300 Office equipment . 35,860...
-
Equity theorists explain that pay and conditions alone do not determine motivation of employees. They believe that when people feel fairly treated or disadvantaged, they are more likely to be...
-
The manager of a commuter rail transportation system was recently asked by her governing board to determine which factors have a significant impact on the demand for rides in the large city served by...
-
Only answer part f please \fQuestion 2 Suppose you are consulting for Exxon Mobil that want to invest on new gas station. You ran the following regression: Sages.- =60 +51Traffiq + 7.- (1) where i =...
-
Write out the form of the partial fraction decomposition of the function (see example). Do not determine the numerical values of the coefficients. x3 (a) x + 7x+6 9x+1 (b) (x + 1)3(x + 2) Submit...
-
You desire to make an 80% by weight vinyl acetate to 20% by weight styrene copolymer via free radical, emulsion polymerization. The r 1 and r 2 values for these monomers are 0.01 and 55,...
-
Q1)In a wheel and axle machine the diameters of the wheel and the axle are 450mm and 60mm respectively.The efficiency is 97%(0.97 per unit).When a body having a mass of 40kg is being lifted.Determine...
-
Smith & Chief Ltd. of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company's income statements...
-
C. In lab, you measure the x & y components of a possible incompressible flow field as u = 2cxy; and where cand a are constants. v = c(a + x - y) 5. (04 pts) Short answer, what is necessary for the...
-
Kim and Tom, two young entrepreneurs wish to form a small proprietary limited company operate a restaurant 'Master Plate Pty Ltd'. On 22 January, Kim entered a contract with Irish Linen Ltd to...
-
Why do planners compute the present value of a sum that will be received in the future? (LO 4)
-
What is internal rate of return? (LO 4)
-
How is economic value added computed? (LO 4)
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App