PROBLEM 8 MZRT charges an initial franchise fee of P70,000. Upon signing of the 3-year agreement, a payment of P28,000 is due. Thereafter, annual payments of P14,000 are required. The franchisor can borrow money at an interest rate of 10%. The franchise agreement is signed on May 1, 20x8 and commenced operations on July 1, 20x8. The PV of an annuity of P1 at 10% for three years is 2.48685. 1. Assuming that the franchisor still has substantial services to perform once the franchise begins operations to maintain the value of the franchise, determine the amount of franchise revenue on December 31, 20x8. 2. Assuming that the total franchise fee includes training services with a value of P2,400 for the period leading up to the franchise opening and for two months following the opening, Determine the franchise revenue on July 1, 20x8. 3. In relation to the given above, determine the amount of service revenue to be recognized on July 1, 20x8. RUBRICS 5 POINTS EACH - CORRECT ANSWERS WITH SOLUTION