Mike is considering quitting his job to start a bakery, his dream work. To do so, he would need to make an investment of

$80,000

today. He estimates that the bakery would generate revenues of

$90,000

over the next five years and would require

$20,000

in expenses. At his current job he earns

$50,000

. Therefore, Mike estimates that the incremental cash flows from opening the bakery would be

$20,000

per year for the next five years. Calculate the NPV of the business using a discount rate of

15%

. Should Mike quit his job and start the bakery?\ Calculate the IRR for the project described in problem 3. If Mike requires a return of

15%

on the business, should he start the bakery?

Mike is considering quitting his job to start a bakery, his dream work. To do so, he would need to make an investment of $80,000 today. He estimates that the bakery would generate revenues of $90,000 over the next five years and would require $20,000 in expenses. At his current job he earns $50,000. Therefore, Mike estimates that the incremental cash flows from opening the bakery would be $20,000 per year for the next five years. Calculate the NPV of the business using a discount rate of 15%. Should Mike quit his job and start the bakery? Calculate the IRR for the project described in problem 3. If Mike requires a return of 15% on the business, should he start the bakery