John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. John has used past financial information to estimate that the net cash flows (cash...

John Wiggins is considering the purchase of a small restaurant. The purchase price listed by the seller is $800,000. John 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                        $ 80,000
                                            7                          70,000
                                            8                          60,000
                                            9                          50,000
                                          10                          40,000

If purchased, the restaurant would be held for 10 years and then sold for an estimated $700,000.
Required:
Assuming that John desires a 10% rate of return on this investment, should the restaurant be purchased? (Assume that all cash flows occur at the end of the year.)