What is the net present value

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Question - Two young entrepreneurs want to invest $210,000 in a restaurant. Their business plan shows that the restaurant will generate the following cash flows:

Year Cash flow

1 $20,000

2 $25,000

3 $25,000

4 $25,000

5 $25,000

6 $30,000

7 $30,000

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 6 years.

Q1: What is the present value?

Q2: What is the net present value?

Q3: What is the payback period?

Q4: Should these entrepreneurs proceed with this investment?

Reference no: EM132975723

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