You are considering purchasing a restaurant franchise. You have projected that the franchise will earn $120,000...
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You are considering purchasing a restaurant franchise. You have projected that the franchise will earn $120,000 in profits the first year, and that those profits will grow 19.1% per year for the next 5 years, 10.9% per year for the 4 years after that, and 6.3% per year for every subsequent year. You also project that you will own the franchise for a total of 20 years, at which point you will be able to sell it for $7,670,000. If you need the investment to return at least a 13.7%, what is the most you will be willing to pay for the franchise? (20 points total) You are considering purchasing a restaurant franchise. You have projected that the franchise will earn $120,000 in profits the first year, and that those profits will grow 19.1% per year for the next 5 years, 10.9% per year for the 4 years after that, and 6.3% per year for every subsequent year. You also project that you will own the franchise for a total of 20 years, at which point you will be able to sell it for $7,670,000. If you need the investment to return at least a 13.7%, what is the most you will be willing to pay for the franchise? (20 points total)
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Answer rating: 100% (QA)
To determine the maximum amount you should be willing to pay for the franchise well need to calculate the present value of all the projected cash flow... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
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