Problem 1 Bella Swan and Edward Cullen are thinking of opening an Italian restaurant. Setting up...

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Problem 1 Bella Swan and Edward Cullen are thinking of opening an Italian restaurant. Setting up the restaurant is very expensive and costs $400,000 today and $200,000 the first year. However, they expect to earn $150,000 their first year, $130,000 the next year, $100,000 the third year, $200,000 the fourth year, and a whopping $300,000 their fifth year. If interest rates are currently 10%, should they open the restaurant of their dreams? Problem 2 Riverdale's Betty Cooper and Jughead are planning to buy Pop's Chock'lit Shoppe. As knowledgeable investors, they know that the restaurant industry is a little risky and they expect to be compensated with a high return. They need to earn at least 8% on their investment in order to take on the project. They expect to pay $300,000 to buy the shoppe today but they expect $50,000 for the next 8 years afterwards (starting in year 1). Should they take on the project? Problem 1 Bella Swan and Edward Cullen are thinking of opening an Italian restaurant. Setting up the restaurant is very expensive and costs $400,000 today and $200,000 the first year. However, they expect to earn $150,000 their first year, $130,000 the next year, $100,000 the third year, $200,000 the fourth year, and a whopping $300,000 their fifth year. If interest rates are currently 10%, should they open the restaurant of their dreams? Problem 2 Riverdale's Betty Cooper and Jughead are planning to buy Pop's Chock'lit Shoppe. As knowledgeable investors, they know that the restaurant industry is a little risky and they expect to be compensated with a high return. They need to earn at least 8% on their investment in order to take on the project. They expect to pay $300,000 to buy the shoppe today but they expect $50,000 for the next 8 years afterwards (starting in year 1). Should they take on the project?

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