John Wiggins is considering the purchase of a small restaurant. The purchase price listed by...
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Accounting
John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $900,000. John has used past financial information to estimate that the net cash flows (cash inflows less cash outflows) generated by the restaurant would be as follows:
Years 1-6 7 8 9 10 Amount $90, eee 80,000 70,eee 68,eee 50,000 If purchased, the restaurant would be held for 10 years and then sold for an estimated $800,000. Required: Determine the present value, assuming that John desires a 9% rate of return on this Investment. (Assume that all cash flows occur at the end of the year.) (Do not round Intermediate calculations. Round your final answers to nearest whole dollar amount) n = Present Value 9% 9% Future Amount $ 90.000 80,000 70.000 60.000 50.000 800,000 9% 9% 9% S 0 Should the restaurant be purchased? No
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