150-seat restaurant

$8,000,000 is needed to construct the restaurant; no additional investment is needed in working capital

The owners have 6,000,000 in cash and borrow the rest from the bank at 5%

The projected average seat turnover is 2 (use 320 days open in a year)

The stockholders require a 15% return on their investment annually

The restaurant pays income taxes at the rate of 25%

The restaurants estimated undistributed expenses, not including income taxes, total $2,000,000

The forecasted cost of food sold and variable labor is 50 percent of sales

What is the projected total revenue?

Answers:

A. $6,600,000

B. $7,000,000

C. $8,400,000

D. $8,800,000