Pepe has been approached about a hotel investment proposal by a young entrepreneur named Winston. The...

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Pepe has been approached about a hotel investment proposal by a young entrepreneur named Winston. The young man seems to have done his homework and presents Pepe with a five-year pro-forma showing cash flows of $118,000, $138,900, $121,250, $142,870, and $146,780 respectively. Pepe knows he can earn an 8% return if he puts his money in a mutual fund. Winston is asking for $450,000. What is the internal rate of return of this project? If you assume 8% as the cost of capital, compute net present value. Should Pepe invest in this project? 1. 2. 3. Pepe has been approached about a hotel investment proposal by a young entrepreneur named Winston. The young man seems to have done his homework and presents Pepe with a five-year pro-forma showing cash flows of $118,000, $138,900, $121,250, $142,870, and $146,780 respectively. Pepe knows he can earn an 8% return if he puts his money in a mutual fund. Winston is asking for $450,000. What is the internal rate of return of this project? If you assume 8% as the cost of capital, compute net present value. Should Pepe invest in this project? 1. 2. 3.

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