Question
Two young entrepreneurs want to invest $250,000 in a restaurant. Their business plan shows that the restaurant will generate the following cash flows: Year Cashflow
Two young entrepreneurs want to invest $250,000 in a restaurant. Their business plan shows that the restaurant will generate the following cash flows: Year Cashflow 1 $10,000 2 $30,000 3 $40,000 4 $50,000 5 $50,000 6 $60,000 7 $60,000 8 $75,000 9 $75,000 10 $75,000 They want to earn at least 16% return They also would like to have their initial investment recovered within 5 years Based on the information above, calculate the following: Rubrics Q1 What is the present value? 11 marks Q2 What is the net present value? 1 mark Q3 What is the payback period? 1 mark Q4 Should these entrepreneurs proceed with this investment? 2 marks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started