Question

1. Based on the data in Table 1 (below) and using the methods related to Kay’s concept of added value, what is the added value (in millions) for McDonald’s and Wendy’s for 2014? Assume an interest rate (opportunity cost of capital) equal to 5%.
2. Based on the data in Table 1 (below) and using the methods related to Kay’s concept of added value, what is the cost per dollar of net output for McDonald’s and Wendy’s for 2014? Assume an interest rate (opportunity cost of capital) equal to 5%.
3. Based on the data in Table 1 (below) and using the methods related to Kay’s concept of added value, what statement is true with regard to the measured comparative advantage between McDonald’s and Wendy’s for 2014? Assume an interest rate (opportunity cost of capital) equal to 5%.

Table 1: 2014 Financial Data

  McDonald's($Millions) Wendy's ($Millions)

Revenues 27,441 2,061

Cost of Goods Sold (Materials) 15,446 1,400

Wages and Salaries 2,488 274

Capital Employed 31,534    3,806

Answer 1

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