Determine if should proceed with the agreement

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Mark is considering purchasing a franchise agreement to sell food for ten years. The agreement requires an investment of $1,500,000 today, $950,000 one year from today, and $350,000 two years from today to establish the restaurant. The franchise generated $550,000 in profits each year from the first year onwards, for ten years. At the end of the tenth year he anticipates that he can sell the furniture in his restaurant for $20,000.

Problem 1: Calculate the IRR

Problem 2: Determine if he should proceed with the agreement if the cost of capital is 9%

Reference no: EM132970591

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