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John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $960,000. John has

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Calculation of Investment's Net Present Value
Net Cash Flows $ (a) Present Value of 1 at 10% (b) Present Value of cash flows (c=a*b) $
Year 1 to Year 6 96000 4.3553 418109
Year 7 86000 0.5132 44135
Year 8 76000 0.4665 35454
Year 9 66000 0.4241 27991
Year 10 56000 0.3855 21588
Year 10 860000 0.3855 331530
Totals
Total present value of cash inflow (a) 878807
Total cash outflow (b) 960000
Net Present Value $ (c=a-b) -81193

The resturant should not be purchased.

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