Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. Helga has

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Helga Is Considering The Purchase Of A Small Restaurant The Purchase Price Listed By The Seller Is 800 000 Helga Has 1 (23.08 KiB) Viewed 9 times

Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. 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 7 8 9 10 Amount $ 80,000 70,000 60,000 50,000 40,000 If purchased, the restaurant would be held for 10 years and then sold for an estimated $700,000. 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.)