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SCHOOL SUBJECTS
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GRADE LEVELS
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Post a New Question | Current Questions | Chat With Live Tutors
Posted by faye on Sunday, September 27, 2009 at 2:33pm.
You have been offered the opportunity to purchase a franchise of Sunshine Juice Stores.
You will have to pay $258,635 for the initial investment in the store and its equipment, plus
$30,000 per year for the lease payments and the franchise fee. The franchise contract obligates
you for 10 years. Operating costs for each year will be $225,000, and the expected
revenue is $298,000 a year. Your hurdle rate is 10%. Ignore income taxes.
Required:
1. Does this investment yield a satisfactory rate of return?
2. What qualitative factors might be considered?
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