One of the big Coffee chain is planning to open a new store in New York

Opening a new store - Whether to go ahead or not. Below are some details

Cost of Capital = 6.15%

Current Stores - 27000

Set up Costs: The cost of setting up a new store is $5 million right now, and this cost is expected to grow at the inflation rate in future years. The cost is depreciable, straight line, over 10 years down to a salvage value, which is 30% of the initial investment.

Note: Cash flow from investing & Financing activities are ignored

Cash flow from operations for 27000 stores = 4.174 Billion

Revenue Estimate in millions from new store opening

Year1	Revenues
1	0
2	5
3	7
4	10
5	12
6	12
7	15
8	15
9	15
10	15

G&A allocation will be 5% of the revenues each year

operating expenses are assumed to be 30% of the revenues

The income from the investment will be taxed at marginal tax rate of 32%.

Calculate the Return on Capital (ROC) and Return on Invested Capital (ROIC) for the New Store

Estimate Accounting Earnings on Project