Capital Budget Assumptions $-$ Base Case

$2.$ Approximate cost of opening a McDonalds restaurant is $8\mathrm{.}5M$ PLN$.$

$3.$ Assume your restaurant will serve $90,000$ orders in year $1$ at an average price of $45$

$4.$ PLN per order. You expect orders to grow by $1\%$ per year.

$5.$ The project life is $5$ years.

$6.$ Variable costs are expected to be $75\%$ of revenues.

$7.$ Fixed costs are assumed to be $300,000$ PLN per year.

$8.$ Depreciation is $2\mathrm{.}5\%$ of capital expenditures cost.

$9.$ The corporate tax rate in Poland is $19\%.$ There is currently no tax on remittances or no limits on remittances. Assume McDonalds will remit $100\%$ of cash flows.

$10.$ Assume they will not pay additional tax to U$.$S for remitted funds either.

$11.$ Assume the salvage value of the business is $10$M PLN after$-$tax $($net of book value$)$ in year $5.$

$12.$ The March $2023$ exchange rate is $1$USD$=3\mathrm{.}963638PLN$ or $1PLN=$$$0\mathrm{.}2522935$USD.

$13.$ Calculate the NPV and IRR of the project. Use your cost of capital as your rate of return.