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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

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