In 2020, Ron James aims to open Daytona Go-Carts, a race track where individuals as young...

 

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In 2020, Ron James aims to open Daytona Go-Carts, a race track where individuals as young as twelve can rent go-carts and participate in races. Through primary market research, Ron has discovered that many teenagers would enjoy participating in go-cart races. Ron has two options for locations for the go-cart race track: Option 1: The cost of the site would be $1.2 million Option 2: The cost of the site would be $1.8 million. Year 1 $200 000 Year 2 $300 000 Forecasted profits for Option 1 are: Year 3 $300 000 Year 4 $300 000 Year 5 $300 000 Forecasted profits for Option 2 are $300 000 in the first year, with profits growing by 20 % per year for the next four years. 2a. State two methods of primary market research. [2 marks] 2b. Calculate, for Option 1 the average rate of return (ARR) (show all your [2 marks] working). 2c. Calculate, for Option 1 the payback period (show all your working). [2 marks] 2d. Calculate, for Option 2, the average rate of return (ARR) (show all your [2 marks] working). 2e. Explain one reason why Option 1 may be a less risky investment than [2 marks] Option 2. In 2020, Ron James aims to open Daytona Go-Carts, a race track where individuals as young as twelve can rent go-carts and participate in races. Through primary market research, Ron has discovered that many teenagers would enjoy participating in go-cart races. Ron has two options for locations for the go-cart race track: Option 1: The cost of the site would be $1.2 million Option 2: The cost of the site would be $1.8 million. Year 1 $200 000 Year 2 $300 000 Forecasted profits for Option 1 are: Year 3 $300 000 Year 4 $300 000 Year 5 $300 000 Forecasted profits for Option 2 are $300 000 in the first year, with profits growing by 20 % per year for the next four years. 2a. State two methods of primary market research. [2 marks] 2b. Calculate, for Option 1 the average rate of return (ARR) (show all your [2 marks] working). 2c. Calculate, for Option 1 the payback period (show all your working). [2 marks] 2d. Calculate, for Option 2, the average rate of return (ARR) (show all your [2 marks] working). 2e. Explain one reason why Option 1 may be a less risky investment than [2 marks] Option 2.

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2a The two methods of Primary market research includ e Interviews Telephone or Face to Face Observat... View the full answer