MGT Inc. is planning to start a chain of fast-food restaurants. The initial capital investment to start a new restaurant is $6,00,000. The equipment in the restaurant has a useful life of 5 years and the expected residual value at the end of the 5 years for tax purposes is supposed to be zero. The following table indicates the expected capacity and the costs and revenues associated with each restaurant.

Year			1	2	3	4	5
Total Capacity (meals)			100000	100000	100000	100000	100000
Utilized Capacity			70%	75%	80%	85%	95%
Per Unit Selling Price and Costs ($)
Revenue p.u.			20.0
Raw Material			2.0
Miscellaneous Supplies			0.2
Variable Employee Cost			0.5
Fixed Employee Cost			0.7
Variable Admin Expense			0.1
Fixed Admin Expense			0.3

• As per the budgeting division, the revenues for the facility are expected to grow at the rate of 6% every year. All costs associated with raw material, miscellaneous supplies, and employees are expected to grow at 3.5% every year. For ease of calculations please assume that the above given cost structure exists irrespective of the start year (Revenues and Variable Costs increase by a factor of Inflation and Capacity Utilization; Fixed Costs only increase by a factor of Inflation)
• The equipment associated with the facility can be sold after 5 years for $40,000.
• The restaurant chains accounts receivables were equal to 5 days of average sales. To ensure continuous service the restaurant plans to maintain 10 days worth of raw materials and miscellaneous supplies on hand at any given point of time. The company pays off its raw material and miscellaneous supplies vendors within 7 days of receipt of inventory. (Accounts Receivables + Inventory Accounts Payables = Working Capital)
• The following information is available to calculate the WACC of MGT Inc.

Company	Debt	Equity	Beta
A	0.65	0.35	1.12
B	0.55	0.45	0.97
C	0.70	0.30	1.21
D	0.60	0.40	1.04
Average	0.63	0.38	1.09
MGT	0.45	0.55

Current Bank Rate	3.50%	Current Rf
XYZ Interest rate spread for MGT Inc.	0.75%	Beta of Debt
Avg. return of top 500 NYSE Listed companies over past 15 years	12.25%	Rm
Avg. Bank Rate over past 15 years	3.30 %	Rf

• The company is expected to open 15 stores in each of the first 5 years of business (2021-2025). For calculating discounted cash flows, assume that all necessary initial capital investments including working capital were made in year 1.
• The terminal growth rate of the company is expected to be 3.5%
• The effective tax rate of the company is expected to be 25%

Assume that an investor is considering investing $10,000,000 in MGT Inc. Based on the above numbers calculate the value of MGT Inc. applying the perpetuity growth method and indicate the stake given to the investor against his investment of $10,000,000. Use the first 5 years time horizon for all your calculations. Show all possible calculations and please explicitly list any assumptions that you make.