Question
Calculate expected return on the investment for each company. Auto Wash Bot Ltd. (AWBL) has recently completed the research and development of a new touch
Calculate expected return on the investment for each company.
Auto Wash Bot Ltd. (AWBL) has recently completed the research and development of a new touch screen app for all mobile devices. This new technology is both more user friendly than the current technology on the market. Auto Wash Bot Ltd has just signed a major contract to provide the Auto Wash Bot terminal to a major producer of mobile devices. The founder of the business would like to sell a 50% interest in the business for $100,000 in order to finance further expansion of operations.
Popeyes Muscle Wash Ltd (PMWL) is a self-service, coin-operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, including soap, wax, vacuuming as well as pressure washing. PMWL has been long established and enjoys the loyalty and repeat business of many local residents. The current owner is getting up in age and would like to sell 100% ownership interest in the business for $100,000 to pursue retirement. The current years income statement is consistent with prior years.
Auto Wash Bot Ltd. | |
---|---|
Revenue | $375,000 |
Cost of Goods Sold | 86,250 |
Gross Profit | 288,750 |
Other Expenses | |
Advertising | 35,400 |
Office Expense | 22,750 |
Research | 195,000 |
Wages and Salaries | 40,000 |
Total Other Expenses | 293,150 |
Income Before Taxes | (4,400) |
Income Tax | 0 |
Net Income | $(4,400) |
Popeyes Muscle Wash Ltd (PMWL) is a self-service, coin-operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, including soap, wax, vacuuming as well as pressure washing. PMWL has been long established and enjoys the loyalty and repeat business of many local residents. The current owner is getting up in age and would like to sell 100% ownership interest in the business for $100,000 to pursue retirement. The current years income statement is consistent with prior years.
Popeyes Muscle Wash Ltd Income Statement For the Year Ended December 31, 2015 | |
---|---|
Revenue | $375,000 |
Cost of Goods Sold | 163,125 |
Gross Profit | 211,875 |
Other Expenses | |
Advertising | 5,200 |
Office Expense | 17,400 |
Repairs and Maintenance | 85,000 |
Wages and Salaries | 50,000 |
Total Other Expenses | 157,600 |
Income Before Taxes | 54,275 |
Income Tax | 8,413 |
Net Income | $45,862 |
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