Two young entrepreneurs want to invest $$275,000$ in a restaurant.

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

Year Cashflow

$1$ $$20,000$

$2$ $$30,000$

$3$ $$40,000$

$4$ $$40,000$

$5$ $$50,000$

$6$ $$60,000$

$7$ $$60,000$

$8$ $$80,000$

$9$ $$90,000$

$10$ $$90,000$

They want to earn at least $12\%$ return

They also would like to have their initial investment recovered within $5$

Based on the information above, claculate the following:

Q$1$ What is the present value?

Q$2$ What is the net present value?

Q$3$ What is the payback period?

Q$4$ Should these entrepreneurs proceed with this investment? Discuss

Use Interest Rate Table to solve for asnwering Q$1$