Question
Chipotle, Inc. recently introduced a delivery service. Consequently, each restaurant has to buy two cars which cost $15,000 each, and can be depreciated in straight
Chipotle, Inc. recently introduced a delivery service. Consequently, each restaurant has to buy two cars which
cost $15,000 each, and can be depreciated in straight line for 5 years with a salvage value of $5,000 (which
can be realized in the sixth year and pays zero tax). The operation costs of the delivery service are $6,000 per
year, and its variable cost is $0.50 per delivery. The average charge for each delivery is $2.50. Chipotle's tax
rate is 25%, and it uses a 10% discount rate. How many meals does Chipotle need to deliver each day before
break-even? (Compare the accounting approach number to the present value approach number)
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