Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bryan Bessner has invested $ 1 , 4 0 0 , 0 0 0 in a small restaurant. He would like to see a 9

Bryan Bessner has invested $1,400,000 in a small restaurant. He would like to see a 9% after-tax return on his investment this year. Bryan faces a personal tax rate of 36%. There are many costs involved in running a restaurant. Estimates indicate that variable costs will use up 63% of the revenue earned by the restaurant. Fixed costs would be: Salaries.....................$680,000 Insurance................... 43,000 License..................... 18,000 Utilities..................... 29,000 Advertising.................... 46,000 Also, depreciation on the theatre building itself would be 10% of the buildings $1,500,000 book value. Part of Bryans investment in the theatre was used to buy kitchen equipment this year, costing $180,000. This equipment depreciates by 15% per year. Part of Bryans investment in the theatre came through a bank loan of $240,000, on which he will be paying 6% interest this year. REQUIRED: a. Please calculate the total amount of revenue that this restaurant will need to earn this year, in order to meet all costs and allow for Bryans expected after-tax return. Show your work. (more space next page)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Business Accounting Volume 1

Authors: Frank Wood, Alan Sangster

8th Edition

0273638394, 9780273638391

More Books

Students also viewed these Accounting questions