Problem $5-4($Algo$)$ Investment analysis; uneven cash flows $[$LO$5-3,5-8]$

Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $$1,000,000.$ 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 Amount

$1-6$ $ $100,000$

$790,000$

$880,000$

$970,000$

$1060,000$

If purchased, the restaurant would be held for $10$ years and then sold for an estimated $$900,000.$

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)$Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $$1,000,000.$ 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:

If purchased, the restaurant would be held for $10$ years and then sold for an estimated $$900,000.$

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)$

Should the restaurant be purchased?