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Two young entrepreneurs want to invest $150,000 in a restaurant. Their business plan shows that the restaurant will generate the following cash flows: Year Cashflow
| Two young entrepreneurs want to invest | $150,000 | 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 | 11% | return | |||||
| They also would like to have their initial investment recovered within | 7 | years | |||||
| Q1 | What is the present value? | ||||||
| Q2 | What is the net present value? | ||||||
| Q3 | What is the payback period? | ||||||
| Q4 | Should these entrepreneurs proceed with this investment? | ||||||
| Use Interest Rate Table to solve for asnwering Q1 | |||||||
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
