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Q1. Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. Helga has used past financial information
Q1. Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. 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: If purchased, the restaurant would be held for 10 years and then sold for an estimated $700,000. a.) Assuming a discount rate of 10%, should the restaurant be purchased? Try solving using Excel spreadsheet. This is to get you started to get familiar with Excel. b.) Do you think it is reasonable to estimate future net cash flows using past financial information? If not, what other alternatives are available to Helga to generate future net cash flows? (5 sentences)
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