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Assume that fast-food restaurants generally provide an ROI of 15%, but that such a restaurant near a college campus has an ROI of 18% because
Assume that fast-food restaurants generally provide an ROI of 15%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above-average turnover (sales/assets). The replacement value of the restaurants plant and equipment is $198,000. If you were to invest that amount in a restaurant elsewhere in town, you could expect a 15% ROI. What is the maximum price you would be willing to pay for the business?
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