Question
need help on first screenshot attached previous assignment with correct answers Before Mike had a chance to move his business, the junk food tax was
need help on first screenshot attached previous assignment with correct answers
Before Mike had a chance to move his business, the junk food tax was repealed and he has decided to stick with his current location and keep his cart. He has also decided to add a menu item. He can either add hot pretzels or slurpees. When assessing his two investment options, Mike would like to make a minimum return of 10% on his investment.
Pretzels
Mike can buy a pretzel warmer for $25,000. He would sell pretzels for $4/each and can purchase them for $35 for a box of 50 pretzels. He will need a propane tank for the pretzel warmer and estimates he will spend $550/month on fuel. Mike estimates he will sell 30 pretzels each day. Mike estimates he can use the pretzel machine to generate income for five years, after which time it will have a zero value.
Slurpees
Mike can buy a slurpee machine for $35,000. He estimates he can sell 75 slurpees per day for $2/each. His variable costs for slurpees is $0.50 per slurpee for syrup and ice. His fuel costs for operating the slurpee machine should be about $750/month. Mike estimates he can use the slurpee machine to generate income for eight years, after which time it will have zero value.
Calculate the Payback Period in months for each of the two investments. Do not use the dollar sign ($). Round your answers to two decimal places Payback Period Pretzel Warmer Value Slurpee Machine Value Cost of Cost of Monthly Cash Monthly Cash Payback Period Payback Period Calculate the Payback Period in months for each of the two investments. Do not use the dollar sign ($). Round your answers to the nearest whole dollar. Net Present Value (NPV) Pretzel Warmer Value Slurpee Machine Value Cost of Investment Estimated useful life in years (enter the number only) Cost of Investment Estimated useful life in years (enter the number only) Hurdle rate (do not include the % sign) Hurdle rate (do not include the % sign) Annual Cash Flow Annual Cash Flow Present Value of Present Value of Future Cash Flows Future Cash Flows NPV of the NPV of the investment investment opportunity opportunity Calculate expected Net Income for TWM's existing location after the junk food tax becomes effective Do not use dollar signs ($). Round answers to the nearest whole dollar. Selling days per month : 20 Net Income - Existing location Products Hot Dogs Churros Water Total Daily Sales 20 200 80 in Units Monthly sales 28,000 8,000 7,200 43,200 in $ Monthly Variable costs ( 10,400 6,000 1,800 18,200 including the new junk food tax) Monthly Contribution 17,600 2,000 5,400 25,000 Margin Monthly Fixed Costs 5,100 Net Income 19,900Calculate the expected monthly Net Income for the new location being considered by TWM. Do not use dollar signs {$). Round answers to the nearest whole dollar. Weeks per month :4 Net Income - Existing location Hot Dogs Churros 56,000 10,000 14,400 80,400 Products Water Weekly sales in Units Monthly sales in 5 costs Monthly Contribution Margin Monthly Fixed Costs for new location Net Income Calculate the incremental cash ow from each of the two investment opportunities. Do not use the dollar sign ($). Round your answers to two decimal places. Incremental Cash Flows Pretzel Wanner Per Unit Per Month Slurpee Machine Per Month Estimated units sold Estimated units sold per month per month Incremental Revenue Incremental Revenue Variable Costs Variable Costs Contribution Margin Contribution Margin Incremental Fixed Cost Incremental Fixed Cost Expected Incremental Expected Incremental Monthly Cash Flows Monthly Cash Flows
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