Posted by Kathy on .
The proposed 'asset' investment for a new restaurant is $2,000,000. The restaurant is expected to generate cash inflows of $300,000 during its 'project' life of ten (10) years. The Weighted Cost of Capital is 10%. What is the Present Value of a 'cash' investment that would generate $300,000 annually, discounted (required rate of return) at 10%?
(b) $300,000 annually, discounted at 8%?