Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

what is the net present value of this investment?? QUESTION 1 5 points Krista and Sammie came across this opportunity to open up a Poke

what is the net present value of this investment?? image text in transcribed
QUESTION 1 5 points Krista and Sammie came across this opportunity to open up a Poke restaurant. The initial investment is anywhere in the low $90K to $205K. Looking at the possibilities in the Houston area, they think the initial investment will only be $180,000. With estimated sales, all expenses, including an annual $30,000 franchise fee, they believe the net cash flow for the first four years are $25,000, $50,000, $65,000, $70,500 respectively. They also look at this a pure investment and would like to sell it after year 4 when they are expecting the highest net cash flow. If their cost of capital is 9.5% and their cap rate is 18%, please provide the answers for the following questions. What is the payback period of this investment? If the payback criterion is 3 years, should they invest? ** For ALL questions, please show all calculation and explain. No points will be given if you simply put a yes or a no without any calculation or explanation.**

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Theory Conceptual Issues In A Political And Economic Environment

Authors: Harry I. Wolk, James L. Dodd, John J. Rozycki

7th Edition

1412953456, 978-1412953450

More Books

Students also viewed these Accounting questions