Judging by prior experience and statistics on new restaurant

Assignment Help Financial Management

Reference no: EM13913821

A U.S. chain of upscale seafood restaurants is considering a new market in SouthEastern Asia, focusing on three potential locations. The market analysis revealed that the revenues and, consequently, earnings in each location will depend on the perception of the chain by the locals. The analysis also revealed that the perception would likely be quite uniform in all three locations. If the restaurants are well perceived, the Present Value of the earnings over the expected life of the restaurant would be $7M. If they are poorly perceived, the Present Value of the earnings would be $1M in each location. It costs $2.5M in investments to set up each location. Judging by prior experience and statistics on new restaurants, it has been estimated that the likelihood of restaurants being well-perceived is 20%, and correspondingly 80% are the chances of the restaurants being poorly-perceived. Should the company undertake the investment? For your analysis, ignore the taxes and assume a risk-neutral discount rate of 10%.

Reference no: EM13913821

Questions Cloud

Compute working capital and current ratio liquidity measures : Compute following liquidity measures: (a) working capital and (b) current ratio. Compute the following profitability measures: (a) profit margin, (b) asset turnover.

Function of the displacement : The thread is pulled at its midpoint O by a constant force F at right angle to AB. Find the acceleration of A and B in the direction at right angles to the direction of F as a function of the displacement(x) of the midpoint O

Find good approximations for stock price : Suppose 40.98-strike call priced at 4.5603; 41-strike call priced at 4.5732; 41.02-strike call priced at 4.5860. Find good approximations for Greeks ? at stock price 40.

Evaluate a promotion campaign for a branded product : Briefly discuss the two objectives below. For each objective defend your position as to why that objective is applicable to a desired profession. Evaluate a promotion campaign for a branded product.

Judging by prior experience and statistics on new restaurant : A U.S. chain of upscale seafood restaurants is considering a new market in SouthEastern Asia, focusing on three potential locations. The market analysis revealed that the revenues. Judging by prior experience and statistics on new restaurants, it has..

Net cash used : net cash used-$438,000 of net cash provided-$264,000 of net cash used.

Steelman press company transferred ken sherm : In April of the current year, Steelman Press Company transferred Ken Sherm from its factory in Louisiana to its plant in Florida.

Determine the acceleration : Determine the acceleration. Find the distance the car travels in the first 8 seconds.

User Account

All Pages