Please do NOT submit Excel files showing your computations. You need to type this project on MS word. Any other format will NOT be marked. Please follow closely the following guidelines in submitting this project: o Question 1: Summarize the indirect costs in a Table and show the final value. Assimine torxhly that the 18 small cocisting lineses plus the new potential entrant (our business) will have qual share the annual revme of our new small burgerrestart in Victorin is therefore, estimated to be approximately CAD$900.626 $17.11 million 8900,536. (7) 18+1 Now, we turn to the five steps of financial evaluations in Fahamy (2019). In the following sections, we state the manulates that will be used in the computations and analyses of every step 1.1 Revenues and costs mandates The total revenue for the first year of operation is estimated to be CAD9900,626 (well, Revmes are to be projected one youts operations. . The direct and indirect costs of operations for the first year are estimated based on the statistics in this World (2019) Industrial report on fast-food restaurants in Canada. The only exceptions are the calculations of rent and administration expens. - Direct costs include purchases of food and beverages and wages. For the first year, purchases of food and beverages and wages are estima to account for 36.7% and 30.2% of the total annual revenue that in projected in eq (7). - Indirect costs include rent, utilities, marketing administration, and other costs. The following are the mandates for estimating each of the previous categories Rent: The wenge floor space for small restaurants in Victoria is calculated by using an online tool from Map Developers (2020). The tool shows that small restaurants like Fat Burger und Tacotino have an average size of 1300 square feet. Our store, which will be one of the small-scale burger centres, is assumed to take the same space. According to the Canadian Real Estate Association's website www.realtor.ca, the commercial retail property rates for les ranges between a minimum of CADS16 and a maximum of CAD$40 per te foot in downtow. Taking the grometric mean, we estimate approximately CAD$25.3 lease per are foot V16 X 40 - 253 Thus, the estimated total rent cost in the first year is $25,3 * 1.300 square feet = 5x2,500 19) Square foot Utilities: Fast food restaurants spend 2.5% of their revenues on services such as gas, de tricity and the internet (This World 2019) Marketing. The projected expenditures convertising represent 2.8% of total revenue (Ibis World 2019). Administration: We are planning to hire one restaurant manager at the average hourly rate of CADIS, and the expected total working hours per week for this position is 18 hours. We 52 weeks per year Other Costs According to This World (2019), organizations in the fast-food industry alio incur various other expenses, which include legal and accounting fees, administrative expeta, insurance and repairs and maintenance, and these costs add up to 15% of total revenue. 1.2 Capital mandates In this section, we discuss the mandates that we will use to compute the total investment cost (TIC), or / for short Recall that TIC"1=FC + NWC wbere FC is fixed capital, which is the sum of fixed investments and peoproduction capital costs, and NWC is the networking capital 1 Background and mandates In this project, we intend to analyze the financial feasibility of opening a new small burger restaurant in downtown Victoria, British Columbia (BC). Burger restaurants are part of the fast-food industry. They are classified under limited-service cating places. Companies in this classification operate under conditions of monopolistic competition, that is, players compete with each other while acting as monopolists in their own segment. The monopoly power is justified by the player's competitive advantage, which could be a characteristic of the product or service, quality, taste, efficiency, or any other key aspect of the service provided. In this industry, the level of competition is high whereas the market concentration and the barriers to entry are low. According to Statistics Canada (2018), in BC, there are nearly 11,000 food and drinking places, and 41.2% of the places are limited service restaurants. This data validates the monopolistie competitive structure of the industry. We begin by estimating the market share of this new business. In 2019. the total revenue of limited- service restaurants in BC was CAD$5.07 billion (Statistics Canada, 2019). 27.7% of this total revenue is the market share of the major players in the industry (IbisWorld, 2019). Thus, the total revenue of small limited-service eating places for minor players, i.e., for businesses similar to ours, is approximately CAD$3.7 billion: $5.07 billion 72.3% = $ 3.7 billion. (1) According to Statistics Canada (2017), the total population in BC Is 4,648,055 and the total population in Victoria is 85.792. Thus, the ratio of the population of Victoria to BC is 85,792 4,648,055 * 100% = 1.85%. (2) Taking this ratio and applying it to the total revenue of small limited-service eating places for minor players in BC, one can project the total revenue of small limited-service restaurants in Victoria to be approximately CADS 68.45 million $3.7 billion x 1.85% = $68.45 million. (3) Now, since we have estimated the total revenue for this industry in Victoria, our next task is to estimate the total revenue of one small burger restaurant in the city. In Vancouver Island, the number of small food and drinking places per 100.000 persones is 202 (Statistics Canada, 2017b). Thus, in Vietoria, with a total population of 85,792, the number of small food and drinking places ought to be 173 restaurants: that is, 202 restaurants 85,792 100,000 = 173 restaurants (4) This number, however, includes all types of restaurants in the region. But, according to Statistics Canada (2018), 41.2% of eating places in BC are limited-service restaurants. Thus, the estimated number of small limited-service restaurants in Victoria is approximately 71 restaurants 173 restaurants x 41.26 71 restaurants. (5) Next, we seek to narrow this number down to account for burger restaurants only. A quick Yellow Pages search yields 24 burger restaurants in Victoria; 6 are major players and 18 are small players. Thus, 18/71 25% of small fast-food places in Victoria are burger restaurants. Since the total revente of small limited- service restaurants in Victoria was found to be approximately CADS 68.45 million (see eq. (3)), then 25% of that revente ought to be a good estimate of the total revenue of small burger restaurants in Victoria. This gives approximately CAD$17.11 million 868.45 million x 0.25 = $17.11 million (6) Please do NOT submit Excel files showing your computations. You need to type this project on MS word. Any other format will NOT be marked. Please follow closely the following guidelines in submitting this project: o Question 1: Summarize the indirect costs in a Table and show the final value. Assimine torxhly that the 18 small cocisting lineses plus the new potential entrant (our business) will have qual share the annual revme of our new small burgerrestart in Victorin is therefore, estimated to be approximately CAD$900.626 $17.11 million 8900,536. (7) 18+1 Now, we turn to the five steps of financial evaluations in Fahamy (2019). In the following sections, we state the manulates that will be used in the computations and analyses of every step 1.1 Revenues and costs mandates The total revenue for the first year of operation is estimated to be CAD9900,626 (well, Revmes are to be projected one youts operations. . The direct and indirect costs of operations for the first year are estimated based on the statistics in this World (2019) Industrial report on fast-food restaurants in Canada. The only exceptions are the calculations of rent and administration expens. - Direct costs include purchases of food and beverages and wages. For the first year, purchases of food and beverages and wages are estima to account for 36.7% and 30.2% of the total annual revenue that in projected in eq (7). - Indirect costs include rent, utilities, marketing administration, and other costs. The following are the mandates for estimating each of the previous categories Rent: The wenge floor space for small restaurants in Victoria is calculated by using an online tool from Map Developers (2020). The tool shows that small restaurants like Fat Burger und Tacotino have an average size of 1300 square feet. Our store, which will be one of the small-scale burger centres, is assumed to take the same space. According to the Canadian Real Estate Association's website www.realtor.ca, the commercial retail property rates for les ranges between a minimum of CADS16 and a maximum of CAD$40 per te foot in downtow. Taking the grometric mean, we estimate approximately CAD$25.3 lease per are foot V16 X 40 - 253 Thus, the estimated total rent cost in the first year is $25,3 * 1.300 square feet = 5x2,500 19) Square foot Utilities: Fast food restaurants spend 2.5% of their revenues on services such as gas, de tricity and the internet (This World 2019) Marketing. The projected expenditures convertising represent 2.8% of total revenue (Ibis World 2019). Administration: We are planning to hire one restaurant manager at the average hourly rate of CADIS, and the expected total working hours per week for this position is 18 hours. We 52 weeks per year Other Costs According to This World (2019), organizations in the fast-food industry alio incur various other expenses, which include legal and accounting fees, administrative expeta, insurance and repairs and maintenance, and these costs add up to 15% of total revenue. 1.2 Capital mandates In this section, we discuss the mandates that we will use to compute the total investment cost (TIC), or / for short Recall that TIC"1=FC + NWC wbere FC is fixed capital, which is the sum of fixed investments and peoproduction capital costs, and NWC is the networking capital 1 Background and mandates In this project, we intend to analyze the financial feasibility of opening a new small burger restaurant in downtown Victoria, British Columbia (BC). Burger restaurants are part of the fast-food industry. They are classified under limited-service cating places. Companies in this classification operate under conditions of monopolistic competition, that is, players compete with each other while acting as monopolists in their own segment. The monopoly power is justified by the player's competitive advantage, which could be a characteristic of the product or service, quality, taste, efficiency, or any other key aspect of the service provided. In this industry, the level of competition is high whereas the market concentration and the barriers to entry are low. According to Statistics Canada (2018), in BC, there are nearly 11,000 food and drinking places, and 41.2% of the places are limited service restaurants. This data validates the monopolistie competitive structure of the industry. We begin by estimating the market share of this new business. In 2019. the total revenue of limited- service restaurants in BC was CAD$5.07 billion (Statistics Canada, 2019). 27.7% of this total revenue is the market share of the major players in the industry (IbisWorld, 2019). Thus, the total revenue of small limited-service eating places for minor players, i.e., for businesses similar to ours, is approximately CAD$3.7 billion: $5.07 billion 72.3% = $ 3.7 billion. (1) According to Statistics Canada (2017), the total population in BC Is 4,648,055 and the total population in Victoria is 85.792. Thus, the ratio of the population of Victoria to BC is 85,792 4,648,055 * 100% = 1.85%. (2) Taking this ratio and applying it to the total revenue of small limited-service eating places for minor players in BC, one can project the total revenue of small limited-service restaurants in Victoria to be approximately CADS 68.45 million $3.7 billion x 1.85% = $68.45 million. (3) Now, since we have estimated the total revenue for this industry in Victoria, our next task is to estimate the total revenue of one small burger restaurant in the city. In Vancouver Island, the number of small food and drinking places per 100.000 persones is 202 (Statistics Canada, 2017b). Thus, in Vietoria, with a total population of 85,792, the number of small food and drinking places ought to be 173 restaurants: that is, 202 restaurants 85,792 100,000 = 173 restaurants (4) This number, however, includes all types of restaurants in the region. But, according to Statistics Canada (2018), 41.2% of eating places in BC are limited-service restaurants. Thus, the estimated number of small limited-service restaurants in Victoria is approximately 71 restaurants 173 restaurants x 41.26 71 restaurants. (5) Next, we seek to narrow this number down to account for burger restaurants only. A quick Yellow Pages search yields 24 burger restaurants in Victoria; 6 are major players and 18 are small players. Thus, 18/71 25% of small fast-food places in Victoria are burger restaurants. Since the total revente of small limited- service restaurants in Victoria was found to be approximately CADS 68.45 million (see eq. (3)), then 25% of that revente ought to be a good estimate of the total revenue of small burger restaurants in Victoria. This gives approximately CAD$17.11 million 868.45 million x 0.25 = $17.11 million (6)