Question

Capital Budgeting Activity Scenario: Your client owns a successful restaurant in downtown Chicago (at least pre-Covid-19!). She wants to open a second restaurant in the suburbs and has asked you to help her choose between two locations.

Key information is listed below. Using the four capital budgeting methods that we know, prepare a presentation that shows your recommendation to your client (and why).

Initial Investment: 2,500,000 and use 9% discount rate

	FOREST PARK (10% TX RATE)	ROSEMONT (10.25% TX RATE)
ANNUAL CASH FLOWS	$1,000,0000	$1,100,000
ANNUAL CASH OUTFLOWS	$400,000	$650,000
# OF YEARS EXPECTED USEFUL LIFE OF PROJECT	25	30

Annual non-cash (all depreciation) expenses: Use straight line depreciation to find!

For both, assume no residual value and: 9% discount rate

REQUIREMENTS: Figure out which location your client should open their location at and explain how you got to each step. Additional MUST HAVES, include clearly identified calculations of the four capital budgeting methodologies (showing your work, not the work of Google or Excel programmers!) we have used in this module, and sufficient information on what these metrics mean, particularly as it relates to your preference decision.

Answer 1

* Kindly comment down for any clarifications and please give positive rating. Thank-you.

solution Forext Park Rotemart Pastialers About flows:- antal investmet 25,00,000 25,00,000 Annou cut flow (1) 400,000 6, Soo PU Annity fatis 297 9.82 10.27 (25, 30 YOX 392800 6675,500 Pu Amoul at flow (182) 9175,000 Totul out flow 642800 B) Annual att low 10,00,000 il.co,000 Pranuity 9.82 10-27 Pub inflows. 98,20,000 11297000 58,92,000 4621500 net presentvale (NPV) enfentlow outflow) Raking Forest Pook lochan phy is mage then Regenant choose Forest Park location.