You are planning on going into business for yourself and you have decided on a location for a quick casual restaurant. The first step is to determine which franchise yeilds the Highest Net Present Value Cash Flow. Once you have determined your choice of franchise, you need to negotiate a lease. The new landloard has given you three options. The time horizion for the project is FIVE years. The Ke for the entire assignment is 12%

Lease Options

1) $460 Rent at the beginning of the month

 

2) 6% Sales at the end of each month

 

3) $230 Rent at the beginning of the month

    3% Sales at the beginning of the year

 

		A		B
Franchise		It's a Wrap		Panini Pleasure
Initial Fee		$3,924.80		$3,484.80
Annual Royalty %		6.05		7.07
Marketing Fee in %		5.02		6.31
Variable Costs		20.13		22.29
Fixed Costs		$431.73		$383.33
Taxes		15%		15%
Sales Projections
Year	1	$33,000		$29,392
	2	$35,640		$35,564
	3	$38,491		$43,033
	4	$41,570		$47,766
	5	$44,896		$53,021

 

You must either use EXCEL to do your calcualtions on the assignment or type all of your calcuations manually for full credit 

You must chose a franchise option and lease option

Answer rating: 100% (QA)

Option 1 460 mo x 12 mos yr x 5 years 276 000 P V 276 000 1 0 12 5 231 ... View the full answer