Question
150-seat restaurant $8,000,000 is needed to construct the restaurant; no additional investment is needed in working capital The owners have 6,000,000 in cash and borrow
150-seat restaurant
$8,000,000 is needed to construct the restaurant; no additional investment is needed in working capital
The owners have 6,000,000 in cash and borrow the rest from the bank at 5%
The projected average seat turnover is 2 (use 320 days open in a year)
The stockholders require a 15% return on their investment annually
The restaurant pays income taxes at the rate of 25%
The restaurants estimated undistributed expenses, not including income taxes, total $2,000,000
The forecasted cost of food sold and variable labor is 50 percent of sales
What is the projected total revenue?
Answers:
A. $6,600,000
B. $7,000,000
C. $8,400,000
D. $8,800,000
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