Jonathan Lark's lifelong dream is to own a restaurant. He owns a premium site for a restaurant across the street from the local university. Now he needs to decide what kind of restaurant to open. Recently, Jonathan began to investigate one of the fastest-growing fast-food franchises in the country, Pepper Roni Pizza. A Pepper Roni Pizza franchise costs $40,000, an amount that is amortized over 15 years. As a franchisee, Jonathan would need to adhere to the company's building specifications. The building would cost an estimated $415,000 and would have a $60,000 salvage value at the end of its 15-year life. The restaurant equipment (fryers, steam tables, booths, counters) is sold as a package by the corporate office at a cost of $190,000, will have a salvage value of $10,000 at the end of its five-year life, and must be replaced every five years. Jonathan estimates the annual revenue from a Pepper Roni Pizza franchise at $1,000,000. Food costs typically run 36% of revenue. Annual operating expenses, not including depreciation, total $470,000. For financial reporting purposes, Jonathan will use straight- line depreciation and amortization. Based on past experience, he uses an 16% discount rate. Click here to view the factor table. (a) Your answer is incorrect. Calculate the restaurant's net present value over the franchise's 15-year life. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to decimal place, e.g. 58,971.) Net present value $ e Textbook and Media Assistance Used APPENDIX 9.1 Present value of $1 received in n periods. Periods 6% 7% 8% 16% 1 2 4% 5% 0.9615 0.9524 0.9246 0.9070 0.8890 0.8638 0.8548 0.8227 0.8219 0.7835 0.9434 0.8900 0.8396 0.7921 0.7473 0.9346 0.8734 0.8163 0.7629 0.7130 9% 10% 0.9174 0.9091 0.8417 0.8264 0.7722 0.7513 0.7084 0.6830 0.6499 0.6209 0.9259 0.8573 0.7938 0.7350 0.6806 3 4 5 11% 12% 13% 14% 0.90090.8929 0.8850 0.8772 0.8116 0.7972 0.7831 0.7695 0.7312 0.7118 0.6931 0.6750 0.6587 0.6355 0.6133 0.5921 0.5935 0.5674 0.5428 0.5194 18% 20% 0.8475 0.8333 0.7182 0.6944 0.6086 0.5787 0.5158 0.4823 0.4371 0.4019 0.8621 0.7432 0.6407 0.5523 0.4761 6 7 8 9 10 0.7903 0.7599 0.7307 0.7026 0.6756 0.7462 0.7107 0.6768 0.6446 0.6139 0.7050 0.6651 0.6274 0.5919 0.6663 0.6227 0.5820 0.5439 0.5083 0.6302 0.5835 0.5403 0.5002 0.4632 0.5963 0.5470 0.5019 0.4604 0.4224 0.5645 0.5132 0.4665 0.4241 0.3855 0.5346 0.4817 0.4339 0.3909 0.3522 0.5066 0.4523 0.4039 0.3606 0.3220 0.4803 0.4251 0.3762 0.3329 0.2946 0.4556 0.3996 0.3506 0.3075 0.2697 0.4104 0.3538 0.3050 0.2630 0.2267 0.3704 0.3139 0.2660 0.2255 0.1911 0.3349 0.2791 0.2326 0.1938 0.1615 0.5584 11 12 13 14 15 0.6496 0.6246 0.6006 0.5775 0.5553 0.5847 0.5568 0.5303 0.5051 0.4810 0.5268 0.4970 0.4688 0.4423 0.4173 0.4751 0.4440 0.4150 0.3878 0.3624 0.4289 0.3971 0.3677 0.3405 0.3152 0.3875 0.3555 0.3262 0.2992 0.2745 0.3505 0.3186 0.2897 0.2633 0.2394 0.3173 0.2858 0.2575 0.2320 0.2090 0.2875 0.2567 0.2292 0.2046 0.1827 0.2607 0.2307 0.2042 0.1807 0.1599 0.2366 0.2076 0.1821 0.1597 0.1401 0.1954 0.1685 0.1452 0.1252 0.1079 0.1619 0.1372 0.1163 0.0985 0.0835 0.1346 0.1122 0.0935 0.0779 0.0649 16 0.5339 17 0.5134 18 0.4936 19 0.4746 20 0.4564 $1 PV = (1 + i)" 0.4581 0.4363 0.4155 0.3957 0.3769 0.3936 0.3714 0.3503 0.3305 0.3118 0.3387 0.3166 0.2959 0.2765 0.2584 0.2919 0.2519 0.2703 0.2311 0.2502 0.2120 0.2317 0.1945 0.2145 0.1784 0.2176 0.1978 0.1799 0.1635 0.1486 0.1883 0.1696 0.1528 0.1377 0.1240 0.1631 0.1456 0.1300 0.1161 0.1037 0.1415 0.1252 0.1108 0.0981 0.0868 0.1229 0.1078 0.0946 0.0829 0.0728 0,0930 0.0802 0.0691 0.0596 0.0514 0.0708 0.0600 0.0508 0.0431 0.0365 0.0541 0.0451 0.0376 0.0313 0.0261 APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 1 2 3 4 5 0.9615 1.8861 2.7751 3.6299 4.4518 0.9524 1.8594 2.7232 3.5460 4.3295 0.9434 1.8334 2.6730 3.4651 4.2124 0.9346 1.8080 2.6243 3.3872 4.1002 0.9259 0.9174 0.9174 0.9091 1.7833 1.7591 1.7355 2.5771 2.5313 2.4868 3.3121 3.2397 3.1698 3.9927 3.8897 3.7907 0.9009 1.7125 2.4437 3.1024 3.6959 0.8929 1.6901 2.4018 3.0373 3.6048 0.8850 1.6681 2.3612 2.9745 3.5172 0.8772 1.6467 2.3216 2.9137 3.4331 0.8621 1.6052 2.2459 2.7982 3.2743 0.8475 1.5656 2.1743 2.6901 3.1272 0.8333 1.5278 2.1065 2.5887 2.9906 4.9173 6 7 8 9 10 5.2421 6.0021 6.7327 7.4353 8.1109 5.0757 5.7864 6.4632 7.1078 7.7217 5.5824 6.2098 6.8017 7.3601 4.7665 4.6229 4.4859 5.3893 5.2064 5.0330 5.9713 5.7466 5.5348 6.5152 6.2469 5.9952 7.0236 6.7101 6.4177 4.3553 4.8684 5.3349 5.7590 6.1446 4.2305 4.7122 5.1461 5.5370 5.8892 4.1114 4.5638 4.9676 5.3282 5.6502 3.9975 4.4226 4.7988 5.1317 5.4262 3.8887 4.2883 4.6389 4.9464 5.2161 3.6847 4.0386 4.3436 4.6065 4.8332 3.4976 3.8115 4.0776 4.3030 4.4941 3.3255 3.6046 3.8372 4.0310 4.1925 11 12 13 14 15 8.7605 9.3851 9.9856 10.5631 11.1184 8.3064 8.8633 9.3936 9.8986 10.3797 7.8869 8.3838 8.8527 9.2950 9.7122 7.4987 7.1390 6.8052 7.9427 7.5361 7.1607 8.3577 7.9038 7.4869 8.7455 8.2442 7.7862 9.1079 8.5595 8.0607 6.4951 6.2065 6.8137 6.4924 7.1034 6.7499 7.3667 6.9819 7.6061 7.1909 5.9377 6.1944 6.4235 6.6282 6.8109 5.6869 5.9176 6.1218 6.3025 6.4624 5.4527 5.6603 5.8424 6.0021 6.1422 5.0286 5.1971 5.3423 5.4675 5.5755 4.6560 4.3271 4.7932 4.4392 4.9095 4.5327 5.0081 4.6106 5.0916 4.6755 16 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 17 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 18 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 19 13.1339 12.0853 11.1581 10.3356 10.3356 9.6036 8.9501 20 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 1 $1 - (1 + i)" PVA = 7.8237 8.0216 8.2014 8.3649 8.5136 7.3792 6.9740 7.5488 7.1196 7.7016 7.2497 7.8393 7.3658 7.9633 7.4694 6.6039 6.7291 6.8399 6.9380 7.0248 6.2651 6.3729 6.4674 6.5504 6.6231 5.6685 5.7487 5.8178 5.8775 5.9288 5.1624 5.2223 5.2732 5.3162 5.3527 4.7296 4.7746 4.8122 4.8435 4.8696