Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years 1 to 6 6789 10 Amount $91,000 (each year) 101,000 111,000 121,000 131,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,210,000. (FV of $1. PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answer to 2 decimal places.) Required: 1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) 1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant? Req 1A Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. Req 1B Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) Total present value S 849,543.02 X < Req 1A Req 1B >
Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years 1 to 6 6789 10 Amount $91,000 (each year) 101,000 111,000 121,000 131,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,210,000. (FV of $1. PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answer to 2 decimal places.) Required: 1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) 1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant? Req 1A Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. Req 1B Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) Total present value S 849,543.02 X < Req 1A Req 1B >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Subject - account
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Transcribed Image Text:Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the net
cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years:
Years
1 to 6
7899
10
Amount
$91,000 (each year)
101,000
111,000
121,000
131,000
Bruce expects to sell the restaurant after 10 years for an estimated $1,210,000. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use
tables, Excel, or a financial calculator. Round your answer to 2 decimal places.)
Required:
1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment. (Assume all
cash flows occur at the end of each year. Be sure to include the selling price in your calculation.)
1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant?
Req 1A
Complete this question by entering your answers in the tabs below.
Answer is complete but not entirely correct.
Req 1B
Calculate the total present value of the net cash flows if Bruce wants to make at least 11% annually on his investment.
(Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.)
Total present value
S 849,543.02
Req 1A
Req 1B >
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