Pasta Inn charges an initial fee of $1,620,000 for a franchise, with $324,000 paid when the agreement is signed and the balance in four annual payments. The present value of the annual payments, discounted at 10%, is $1,036,800. The franchisee has the right to purchase $30,000 of kitchen equipment and supplies for $51,800. An additional part of the initial fee is for advertising to be provided by Pasta Inn during the next five years. The value of the advertising is $500 a month. Collectibility of the payments is reasonably assured and Pasta Inn has performed all the initial services required by the contract.