Question: please answer. Rick is considering opening a hotdog stand on Michigan Avenue. Ricks market research shows that the clientele is young professionals, typically without children,

please answer.

Rick is considering opening a hotdog stand on Michigan Avenue. Ricks market research shows that the clientele is young professionals, typically without children, who like the traditional aspect of eating hotdogs, but also relish his gourmet, specially manufactured low-fat hotdogs and the healthy side dishes his stand also sells. Rick's overall plan is to get the stand up and running for five years, and then sell the stand off to a new owner and retire to Florida.

1. Rick estimates that the cost of starting up a stand will be as follows:

Purchase of retail kiosk (mobile retail food outlet) $500,000

Specialized kitchen equipment $50,000

Installation of the kitchen equipment $10,000

Furniture and fittings $50,000

2. Rick estimates that annual operating costs for his stand as follows:

Kitchen and service staff (5 people)- total of $200,000 per year

License and rent costs $150,000

Raw materials:

-Hotdogs- $2 per hotdog. Raw material price per burger goes up by 10% every year.

-Drinks- $38,400

-Other food supplies- $58,900

-Nonfood supplies- $50,200

3. The revenues at his current location are as follows:

Sales value- $5 per hotdog. Sale price for hotdogs increase every year by 50%.

Average daily sales- #300 hotdogs. The sales increase every year by 20% in quantity.

Drinks- $100,000.

Other food sales- $155,000

4. Other information:

Marginal tax rate is 35%

Cost of Capital is 10%

Cost of the stand (kiosk), together with the cost of the equipment, furniture and fittings and the installation, is depreciated over five years according to the straight-line method. The stand (together with the furniture and kitchen equipment) is expected to be worth $300,000 after five years of service.

Note: The definition of an asset's cost is all costs that are necessary to get an asset in place and ready for use.

1. Construct a model in Excel to evaluate the project. (Input values in sheet 1)

2. What is the NPV of this investment?

3. Consider several values of cost of capital from 7% to 13%. Looking at the chart, insert your observations and conclusion on page 2.

4. Set some goal value for NPV (choose a value yourself) and use Excel file to find number of hotdogs (quantity) that the new stand must sell annually to achieve the goal.

5. Suppose that you are unsure about the price Rick would be able to charge. Rick would like to generate at least $300,000 in NPV with the new kiosk. Find price per hotdog necessary to achieve this goal.

please answer. Rick is considering opening a hotdog stand on Michigan Avenue.
Ricks market research shows that the clientele is young professionals, typically without
children, who like the traditional aspect of eating hotdogs, but also relish
his gourmet, specially manufactured low-fat hotdogs and the healthy side dishes his
please answer all the specific question on the excel sheets as it is shown. Thank you!

Years C 100 0.00 2.00 3.00 200 5.00 2 Pro per un No of units Total sale of Burgers Drinks Other foodles 7 Total Sales Rosales 30 Cost of Raw material Burgers 12 Total Raw material for the burgers 33 Drinks 34 other food oplies 15 Nonfood coles 17 Taast ood 2. Otchen and service stat 22 cense and rentos 23 Deprecation 24 Laci as 26 Tax 27 25 30 Degradation 31 Purchase of retail 42 33 Essex sa 35 of capital 10 36 PV of 27 NULL 30 NPV ju Rate 7.00 $ 8.00% 5 9.00% $ 610.00% $ 7 11.00% 5 12.00% 5 9 13.00% $ 20 ulu NPV Cost of Capital Tout Year 2 Year YEN Years $ $ SS SSS SS LS $ 5 ES $ $ 5 SIS 5 5 STRESS $ $ $ $ $ s $ $ 21 22 NPV and cost of capital 25 26 19 20 21 22 24 25 26 Write conclusion of what you see here 27 29 30 31 32 33 DEX Per 7 72 10 Total mater 14 O foods 17 GLE 19 20. 20 22 and 24 Degree 20 20 Bluser 22 35 36 Coul olan 27 Pos 30 NELLA Desired NEY $300.000 Deted NEX Years 1 2 3 22 22 > > Price per un No of units Total Sale of Burgers Drinks Other food sales 30 Total Sales 12 Cost of Raw materia 13 Burgers 14 Drinks Is Other food was 35 Non lood succes sa Total Cost loodsald 39 20 GEOS 22 tchen and vices 23 Woense and rent costs 24 Deprecation 25 Lacobedoel 26 22 Tax 35 28 30 31 Plus: Deprecation 32 Purchase of real ko 33 34 Een 35 36 cost of capitale om 37 PV of s 38 Neun 39 40 Dottern Years C 100 0.00 2.00 3.00 200 5.00 2 Pro per un No of units Total sale of Burgers Drinks Other foodles 7 Total Sales Rosales 30 Cost of Raw material Burgers 12 Total Raw material for the burgers 33 Drinks 34 other food oplies 15 Nonfood coles 17 Taast ood 2. Otchen and service stat 22 cense and rentos 23 Deprecation 24 Laci as 26 Tax 27 25 30 Degradation 31 Purchase of retail 42 33 Essex sa 35 of capital 10 36 PV of 27 NULL 30 NPV ju Rate 7.00 $ 8.00% 5 9.00% $ 610.00% $ 7 11.00% 5 12.00% 5 9 13.00% $ 20 ulu NPV Cost of Capital Tout Year 2 Year YEN Years $ $ SS SSS SS LS $ 5 ES $ $ 5 SIS 5 5 STRESS $ $ $ $ $ s $ $ 21 22 NPV and cost of capital 25 26 19 20 21 22 24 25 26 Write conclusion of what you see here 27 29 30 31 32 33 DEX Per 7 72 10 Total mater 14 O foods 17 GLE 19 20. 20 22 and 24 Degree 20 20 Bluser 22 35 36 Coul olan 27 Pos 30 NELLA Desired NEY $300.000 Deted NEX Years 1 2 3 22 22 > > Price per un No of units Total Sale of Burgers Drinks Other food sales 30 Total Sales 12 Cost of Raw materia 13 Burgers 14 Drinks Is Other food was 35 Non lood succes sa Total Cost loodsald 39 20 GEOS 22 tchen and vices 23 Woense and rent costs 24 Deprecation 25 Lacobedoel 26 22 Tax 35 28 30 31 Plus: Deprecation 32 Purchase of real ko 33 34 Een 35 36 cost of capitale om 37 PV of s 38 Neun 39 40 Dottern

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