QUESTION 9 (16 MARKS) Upon graduation, you are considering whether or not to open a restaurant. You find you are able to rent an excellent 6,000 ft location on a 5-year lease which will provide a nice 50 ble (4 sets per table) restaurant with sufficient kitchen space. Capital costs including renovations, funin and equipment are estimated to be $350,000 which you will have to invest up front w restaurant going. Your projected cash flows over the next five years are as follows: get the Year 2025 Cash Flow $82,000 2026 58,000 2027 134.000 2028 46,000 2029 47.000 Total $367,000 REQUIRED: Answer a) and b) using the above information a) Determine the payback period for this potential investment) (4 Marks) ANSWER years b) Using the Accounting Rate of return determine whether the project will continue assuming you require a 25% rate of return. You expect to have a residual value of $10,000 at the end of 5 years. (4 Marks) Would you continue with the project (circle one) YES NO Continued on next page Page 10 of 12