Compute dfl and dcl for both financing plans

Assignment Help Financial Management

Reference no: EM131319121

A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 30% of sales, while the fixed cost will be $540,000 The first year's sales estimates are $1,500,000. The cost to start up this restaurant will be $2,000,000. Two financing alternatives are being considered: a. 50% equity financing and 50% debt at 9% or b. all equity financing. Common stock can be sold at $5 per share. A. Compute the operating Break-even point in dollars. B. Compute DOL C. Compute DFL and DCL for both financing plans.

Reference no: EM131319121

Questions Cloud

Describe fully elco powers and the communitys ability : For each threat, describe the types of crises that might result and how these would likely impact the city of Solace. For each threat, describe fully Elco Power's and the community's ability to do the Prevent the threat or likely crisis.

What is the firm cash conversion cycle : Bain & Company has the following data. What is the firm's cash conversion cycle?

How the effectiveness of skilling''s method scales : [Hint: Skilling's method is invariant under affine transformations, so the rejection probability at equilibrium can be found by looking at the case of a separable Gaussian.]

What is the probability that a customer : What is the probability that a customer who bought an item at regular price purchased the extended warranty? Purchased extended warranty of regular price- 0.21

Compute dfl and dcl for both financing plans : A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 30% of sales, while the fixed cost will be $540,000 The first year's sales estimates are $1,500,000. The cost to start up this restaurant will ..

Explain what the reader must know about the organization : In one-to-two paragraphs, explain what the reader must know about the organization/school setting to enrich their understanding of the intervention/innovation. (e.g., details about the organization/school, staff, number and type of learners/employ..

What ways does the lord provide for his sheep : The Lord is described as a shepherd. What ways does the Lord provide for his sheep ?Of the 4 provisions in vv. 1-4, which one does not contain shepherding imagery? What separates this imagery from the other 3?Read vv. 5-6. Identify and explain the me..

What is the expected annual return on stock : If Negan Corp. common stock is valued at $40 per share, dividends are paid quarterly and expected to grow quarterly by 1.234% forever, and the next dividend is due in 3 months and expected to be $2.15, then what is the expected annual return on Negan..

Implement gibbs sampling for the inference : Assign a broad Gaussian prior to µ and a broad gamma prior (24.2) to the precision parameter β = 1/σ2. Each update of µ will involve a sample from a Gaussian distribution, and each update of σ requires a sample from a gamma distribution.

User Account

All Pages