Question

In: Finance

An existing and established restaurant chain wants to open another location. Their analysis tells them that...

An existing and established restaurant chain wants to open another location. Their analysis tells them that the new building will lease for $4k monthly. They would need to make $500k in improvements, which they would depreciate over 10 years. Salaries for new employees would be $400K per year. Food costs would be 25% of sales. Incremental revenues are expected to be $120K per month initially with 3% growth year over year. If their existing tax rate is 22% and the existing expected return is 15%, what is the incremental value of the new location?

Solutions

Expert Solution

Answer:

Incremental value of the new location = $2,489,435.01

Working:

Lease =$4000 per month

Yearly lease =4000 * 12 =$48,000

Incremental revenue in year 1 = 120000 * 12 = $1,440,000

jeff jeffy answered 5 months ago
Next > < Previous

Related Solutions

The manager of a supermarket chain wants to determine if the location of the product -...
The manager of a supermarket chain wants to determine if the location of the product - where it is to be displayed - has any effect on the sale of a pet toys. Three different aisle locations are to be considered: the front of the aisle, the middle of the aisle, or the rear-aisle. Twenty-one stores are randomly selected, with 7 stores randomly assigned to sell the pet toy at the front-aisle, the middle-aisle, and the rear-aisle. Front Middle Rear...
The Waco Twin Peaks restaurant was a franchised location of the Twin Peaks chain of sixtyseven...
The Waco Twin Peaks restaurant was a franchised location of the Twin Peaks chain of sixtyseven sports bar-style restaurants with log cabin décor based in Dallas, Texas. Similar to Hooters restaurants, the concept featured “scantily clad waitresses toting beer in frosted glasses” (Smith, 2015). 1. Diagram the channel(s) structure for the Twin Peaks chain of restaurants. Identify all the types and examples of relevant channel members in your diagram. Be as comprehensive and specific as possible in your design.
1. David is an experienced restaurant manager who wants to open his own restaurant (at one...
1. David is an experienced restaurant manager who wants to open his own restaurant (at one location only) and be the manager of it. He knows that he needs at least $100,000 to create and operate the business, and he knows that he can only raise $50,000 on his own towards the $100,000 he needs. Name for him all of the types of business organizations that exist (all of them). Tell him which two of those business organizations would likely...
A restaurant chain in Ontario wants to know the level of satisfaction of their customers. From...
A restaurant chain in Ontario wants to know the level of satisfaction of their customers. From each of Toronto and Ottawa, a random sample of 14 customers was selected and asked to rate their dining experience on a scale from 1 to 10 (with 1 being not satisfied at all, 10 being extremely satisfied). A total of 28 scores was collected. Below is a summary of the data: City Toronto Ottawa Sample Mean 4.3611 5.9444 Sample std. 1.1401 2.4254 #...
David Ortega is the lead researcher for an upscale restaurant group hoping to add another chain...
David Ortega is the lead researcher for an upscale restaurant group hoping to add another chain that would compete directly with the upscale Smith and Wollensky restaurants (http://www.smithandwollensky.com). Smith and Wollensky is also considering opening a lesser priced “Grill.” David wants to learn what people are willing to pay for and what sacrifice can be made to deliver a satisfying if not luxurious experiences, and how can he create a unique experience at a lower price? David decides a qualitative...
A Manager wants to consider another variable in determining product location for paper products. In addition...
A Manager wants to consider another variable in determining product location for paper products. In addition to shelf space, the manager wants to consider whether placing the product at the front (= 1) or back (= 0) of the aisle influences weekly sales. Use the dataset below: a. Run a multiple regression using shelf space (X1) and location (X2) to predict sales (Y). Report your regression equation. b. Is the regression model you ran statistically significant? How can you tell?...
A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but...
A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but not its Mountain Brook location. Nightly revenue averaged $6,000 in Vestavia Hills and $4,000 in Mountain Brook before the menu change, but $7,000 in Vestavia Hills and $3,000 in Mountain Brook after the menu change. The difference-in-difference estimate of the increase in average nightly revenue attributable to the menu change is a.$4,000 b. $0 c.$1,000 d.$2,000.
A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but...
A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but not its Mountain Brook location. Nightly revenue averaged $8,000 in Vestavia Hills and $7,000 in Mountain Brook before the menu change, but $9,500 in Vestavia Hills and $8,000 in Mountain Brook after the menu change. a. The difference-in-difference estimate of the increase in average nightly revenue attributable to the menu change is b. In the previous question, the increase in average nightly revenue attributable...
Jason wants to open a restaurant in Montreal. After analysing the market and requirement for resources...
Jason wants to open a restaurant in Montreal. After analysing the market and requirement for resources for opening a restaurant he finally starts his business in May. The following business transactions are occurred during its first month: May 2020.he named his restaurant as “Jason Delight”. May 1 Invested $20,000 in cash and office equipment that had face value of $5000 in the business. ​2 Purchased office equipment $2500 and office supplies for $1900 on credit ​4. Paid the $1100 salary...
The retailing manager of a supermarket chain wants to determine whether product location has any effect...
The retailing manager of a supermarket chain wants to determine whether product location has any effect on the sale of pet toys. Three different aisle locations are considered: front, middle, and rear. A random sample of 18 stores is selected with 6 stores randomly assigned to each aisle location. The size of the display area and price of the product are constant for all stores. At the end of a 1-month trial period, the sales volumes (in thousands of dollars)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT