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There are two different restaurant chains that you have

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There are two different restaurant chains that you have identified as potential investment opportunities. You are looking ofr a minimum required rate of return of 8% per year. As a starting point, you have the following information:
Restaurant X Restaurant Y

  • Sales $10,000,000 $6,000,000
  • Net Operating Income 200,000 300,000
  • Average Operating Assets 2,000,000 3,000,000

a) Calculate the ROI for each restaurant
b) Calculate the residual income for each restaurant
Indicate which investment opportunity you would choose and why.

Reference no: EM13599472

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