Your client owns a successful restaurant in downtown Chicago. The client wants to open a 2^nd restaurant in the suburbs and has asked you to help choose between two locations. Key information is listed below. Using the four capital budgeting methods that we have focused on. Prepare a presentation that shows your recommendation(s) to your client (and why).

				Norridge		Forest Park
Initial Investment:			4,000,000		4,000,000
Annual cash inflows:			$1,000,000		$1,200,000
Annual cash outflows:			$600,000		$850,000
Annual non-cash (all depreciation) expenses:
Use straight line depreciation to find!
# of years of expected useful life of project:	25		30
For both, assume no residual value and:

investment amount (for each location) and discount rate to use, respectively: 4,000,000 and 10%

Explain to your client which location they should choose to open the second restaurant with clearly identified calculations of the four capital budgeting methodologies. Explain what these metrics mean, especially as it relates to your preference.

Answer rating: 100% (QA)

Presentation Capital Budgeting Analysis for Second Restaurant Location Objective To determine the optimal location for opening a second restaurant in ... View the full answer