Foodelicious Corp

question 100

Multiple Choice

Foodelicious Corp. is evaluating whether it should take over the lease of an ethnic restaurant in Manhattan. The current owner had originally signed a 25-year lease, of which 16 years still remain. The restaurant has been growing steadily at a 7 percent growth for the last several years. Foodelicious Corp. expects the restaurant to continue to grow at the same rate for the remaining lease term. Last year, the restaurant brought in net cash flows of $310,000. If the firm evaluates similar investments using a15 percent discount rate, what is the present value of this investment? (Round to the nearest dollar.)

• A) $2,966,350
• B) $2,838,182
• C) $3,109,460
• D) $2,709,124

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