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Please help me finish this project by 13:00 pm tomorrow, thank you! Beaver Pizza Beaver Pizza owns and operates pizza shops and is considering three
Please help me finish this project by 13:00 pm tomorrow, thank you!
Beaver Pizza Beaver Pizza owns and operates pizza shops and is considering three expansion options, plan A, plan B, and Plan C. Plan A - Small Shops Beaver Pizza would open eight (8) small shops for a cost of $8,400,000. The eight shops are expected to generate a net annual cash flow of $1,500,000. The expected life of the shops is 10 years with no expected value at the end of the 10 years. Each small shop will annually generate $850,000 of revenue with a contribution margin of 70%, fixed COGS of $385,000, and fixed SG&A of $127,500. Plan B - Large Shops Beaver Pizza would open three (3) larger shops for a cost of $8,250,000. The three shops are expected to generate a net annual cash flow of $1,080,000. The expected life of the shops is 10 years with an expected residual value of $1,000,000. Each large shop will annually generate $1,875,000 of revenue with a contribution margin of 64%, fixed COGS of $686,667, and fixed SG&A of $395,000. Plan C Trailers Beaver Pizza would purchase six (6) fully enclosed pizza trailers and six (6) vans for use at large community events or corporate catering. The trailers cost $85,000 each and the vans cost $48,000 each. Each trailer/van combination is expected to generate a net annual cash flow of $38,000. The expected life of both the trailers and vans is 7 years with an expected residual value of $15,000 per trailer and $12,000 per van. Each trailer will annually generate $110,000 of revenue with a contribution margin of 75%, fixed COGS of $42,643, and fixed SG&A of $17,000. Assumptions Straightline depreciation 10% annual required rate of return Compute & Rank Calculate the following and rank the projects from best to worst for each metric. Payback period Rate of return Net present value Profitability index Internal rate of return 1st 2nd 3rd Payback Period Rate of Return Net Present Value Profitability Index IRR Item Net Operating Income Fixed SG&A Fixed COGS Contribution Margin Variable SG&A Variable COGS Revenue Plan A Small Shops Individual Total Unit Project Plan B Large Shops Individual Total Unit Project Beaver Pizza Operating Results Forecast Forecast by Individual Unit Plan C Trailers Individual Total Unit Project Beaver Pizza Expansion Options Plan A Payback Period Rate of Return Net Present Value Profitability Index Internal Rate of Return Plan B Plan C Present\tValue\tTables Integrity\t-\tRespect\t-\tResponsibility Page\t1Step by Step Solution
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