Two young entrepreneurs want to invest $$1,50,000$ in a restaurant.

Their business plan shows that the restaurant will generate the following cash flows:

Year Cashflow

$1$ $$15,000$

$2$ $$15,000$

$3$ $$25,000$

$4$ $$25,000$

$5$ $$25,000$

$6$ $$40,000$

$7$ $$40,000$

$8$ $$40,000$

$9$ $$45,000$

$10$ $$50,000$

They want to earn at least $10\%$ return

They also would like to have their initial investment recovered within $7$ years

Based on the information above, claculate the following: Rubrics

Q$1$ What is the present value? $11$ marks

Q$2$ What is the net present value? $1$ mark

Q$3$ What is the payback period? $1$ mark

Q$4$ Should these entrepreneurs proceed with this investment? $2$ marks

$15$ marks

Use Interest Rate Table to solve for asnwering Q