Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $910,000. Helga 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 Amount $ 91,000 7 8 9 10 81,000 71,000 61,000 51,000 If purchased, the restaurant would be held for 10 years and then sold for an estimated $810,000. Required: Determine the present value, assuming that Helga desires a 10% rate of return on this investment. (Assume that all cash flows occur at the end of the year.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1 FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Future Amount n = Present Value $ 91,000 10% 6 81,000 10% 7 71,000 10% 8 61,000 10% 9 51,000 10% 10 810,000 10% 10 Should the restaurant be purchased?

Q: What is the purpose of EDI?

A: Transparency in electronic data exchange: Expanding EDI enables suppliers to get access to a buyer's…

Q: Define Assigning.

A: Assigning is a process of assignment. Assignment means a transfer of a right to receive a…

Q: Define terminal value

A: Terminal value is the value of the project or the security at the end of a specified future date.…

Q: Define correlation

A: Correlation: Correlation is a statistical method that can display whether and just how strongly…

Q: Define NRV method.

A: Definition:   Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: What are the levels of data hierarchy?

A: Accounting Information System:   This refers to a system that is adopted by an organization to…

Q: How is RI calculated?

A:

Q: Define the term realization principle.

A: Accounting: Accounting refers to the information system, where the economic activities of a…

Q: What is multiple IRRs?

A: Multiple IRRs IRR is a discounting rate at which an amount of investment equals PV of the future CF.…

Q: Define value drivers

A: Introduction: Value drivers are related to concept of free cash flow valuation model. This helps the…

Q: What is alpha transfer?

A: The term ‘Alpha’ refers to the active return on investment. In other words, the excess return from…

Q: How is materiality concept applied?

A: Accounting principles:

Q: Can you explain DCF model?

A: Introduction Discounted cash flows: DCF is abbreviated as discounted cash flows. The concept of…

Q: Define characteristic line

A: Characteristic line is a graphical representation of alpha (α) where alpha is the difference between…

Q: What are the types of external user?

A: Entity needs to prepare a financial statement for the use of internal and external decisions making.…

Q: what is Reference control ?

A: I assumed as a question, as what is meant by the reference  to cost control?

Q: What is skimming?

A: Skimming: It is the fraudulent process under which the employees of the company steal the cash from…

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.