Solution-Determine the present value

Determine the present value

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Question - John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $820,000. 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:

Year's	Amount
1- 6	$82,000
7	72,000
8	62,000
9	52,000
10	42,000

If purchased, the restaurant would be held for 10 years and then sold for an estimated $720,000.

Required - Determine the present value, assuming that John desires a 10% rate of return on this investment. (Assume that all cash flows occur at the end of the year.)

Reference no: EM132851107

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Determine the present value

Reference no: EM132851107

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