Operating costs would include 70000 per year for salaries

Reference no: EM13598255

Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise:

a. A suitable location in a large shopping mall can be rented for $3,500 per month.
b. Remodeling and necessary equipment would cost $270,000. The equipment would have a 15-year life and an $18,000 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation.
c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $300,000 per year. Ingredients would cost 20% of sales.
d. Operating costs would include $70,000 per year for salaries, $3,500 per year for insurance, and $27,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 12.5% of sales.

(a) Compute the simple rate of return promised by the outlet.

Reference no: EM13598255

Questions Cloud

Farr company purchased a new van for floral deliveries on : farr company purchased a new van for floral deliveries on january 1 2012. the van cost 48000 with an estimated life of

Rons quik shop bought machinery for 50000 on january 1 2012 : rons quik shop bought machinery for 50000 on january 1 2012. ron estimated the useful life to be 5 years with no

The 2010 balance sheet of marias tennis shop inc showed : the 2010 balance sheet of marias tennis shop inc. showed long-term debt of 2.3 million and the 2011 balance sheet

You are evaluating two different silicon wafer milling : you are evaluating two different silicon wafer milling machines. the techron i costs 290000 has a 3 year life and has

Operating costs would include 70000 per year for salaries : paul swanson has an opportunity to acquire a franchise from the yogurt place inc. to dispense frozen yogurt products

Remodeling and necessary equipment would cost 270000 the : remodeling and necessary equipment would cost 270000. the equipment would have a 15-year life and an 18000 salvage

Flaxco purchases inventory from overseas and incurs the : flaxco purchases inventory from overseas and incurs the following costs the cost of the merchandise is 50000 credit

A company had inventory of 10 units at a cost of 20 each on : a company had inventory of 10 units at a cost of 20 each on november 1. on november 2 it purchased 10 units at 22 each.

When would we use present value calculations when would we : a. when would we use present value calculations? when would we use future value calculations? which is more likely to

User Account

All Pages