Should these entrepreneurs proceed with this investment

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Reference no: EM133378420

Case: Two young entrepreneurs want to invest $150,000 in a restaurant. Their business plan shows that the restaurant will generate the following cash flows:

Year Cashflow

1 $ 15,000

2 $ 15,000

3 $ 25,000

4 $ 25,000

5 $ 25,000

6 $ 40,000

7 $ 40,000

8 $ 40,000

9 $ 45,000

10 $ 50,000

They want to earn at least 10% return.

They also would like to have their initial investment recovered within 7 years.

Based on the information above, calculate the following in detail:

Question 1 What is the present value?

Question 2 What is the net present value?

Question 3 What is the payback period?

Question 4 Should these entrepreneurs proceed with this investment?

Reference no: EM133378420

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