Question

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 have a required return of 8%. 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).

Using the IRR method, should they take on the project? (Use excel)

Answer 1