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Helga is considering the purchase of a small restaurant. The purchase price listed by the...

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Accounting

Helga is considering the purchase of a small restaurant. The purchase price listed by the seller is $870,000. 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 $ 87,000
777,000
867,000
957,000
1047,000
If purchased, the restaurant would be held for 10 years and then sold for an estimated $770,000.
Required:
Determine the present value, assuming that Helga desires a 9% rate of return on this investment. (Assume that all cash flows occur at the end of the year.)

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