Calculate estimated NOPAT (i.e., net income if no debt) and after-tax operating cash flow for each...
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Calculate estimated NOPAT (i.e., net income if no debt) and after-tax operating cash flow for each store concept per year. 2. What is the NPV of each store concept? 3. What is the IRR of each store concept? 4. Calculate the break-even number of customers per year for each concept at the operating profit, after-tax operating cash flow and NPV levels (in the above models, the cash flows per year are constant, thus, customers needed to break-even at the NPV level is a meaningful question). Assumptions Initial Investment Life (years) Customers per year Customer bill per visit Food and drink cost per customer Other VCR as percentage of Sales Total Fixed Costs per year (Excluding D) Depreciation expense per year Tax rate Standalone $2,400K 7 200K $18.00 $1.30 65% $450K Straight line 18% Store in a Store $900K 5 100K $14.00 $1.30 46% $350K Straight line 18% The systematic risk as measured by the CAPM Beta is estimated at 1.3 (you may use a risk-free rate of 1.5% and an expected market risk premium of 5.5%). Calculate estimated NOPAT (i.e., net income if no debt) and after-tax operating cash flow for each store concept per year. 2. What is the NPV of each store concept? 3. What is the IRR of each store concept? 4. Calculate the break-even number of customers per year for each concept at the operating profit, after-tax operating cash flow and NPV levels (in the above models, the cash flows per year are constant, thus, customers needed to break-even at the NPV level is a meaningful question). Assumptions Initial Investment Life (years) Customers per year Customer bill per visit Food and drink cost per customer Other VCR as percentage of Sales Total Fixed Costs per year (Excluding D) Depreciation expense per year Tax rate Standalone $2,400K 7 200K $18.00 $1.30 65% $450K Straight line 18% Store in a Store $900K 5 100K $14.00 $1.30 46% $350K Straight line 18% The systematic risk as measured by the CAPM Beta is estimated at 1.3 (you may use a risk-free rate of 1.5% and an expected market risk premium of 5.5%).
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To calculate the estimated NOPAT and aftertax operating cash flow for each store concept per year we need to first calculate the operating income for each store concept Operating income Gross profits ... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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