After a trip to Bordeaux France you are considering opening a restaurant based on Restaurant L'Entecote. You will offer a fixed menu of salad, steak & French fries. Your innovation is that you will used a red wine sauce instead of a butter sauce. You plan to run the restaurant for two years and then retire. Start-up costs, to be incurred immediately, are $500,000. Start-up costs include kitchen equipment, kitchen supplies, renovations, furniture, fixtures and the point-of-sales system. Assume that all of those assets are classified as 5-year property. The assets can be sold for $150,000 after two years. You expect 100 dinners per night. The restaurant will be open for 300 nights per year. The average dinner orders food with a menu price of $35 and beverages with a menu price of $15. Food costs are 34% of the menu price and beverage costs are 50% of the menu price. The nightly wages are $2,160 (for the chef, 5 kitchen staff, a bartender, and 10 wait staff). Municipal tax, rent and utilities are $41,400 per annum. Assume that all revenues and operating expenses are received (paid) at the end of the year. The small business tax rate is 20%. The cost of capital is 10%. When the restaurant opens you will have to invest in an inventory of wine, beer and liquor costing $50,000. What is initial cash flow for the L'Entrcote project?

The nightly wages are $2,160 (for the chef, 5 kitchen st Assume that all revenues and operating expenses arer The small business tax rate is 20%. The cost of capital i When the restaurant opens you will have to invest in an MACRS Depreciation Rates Y ear 5-Year 3-Year 33.33% | 2000 44.45% 2 3200% -$50,000 -$175,000 -$275,000 O -$500,000 O -$550,000 Moving to another question will save this response. Ask me anything