Scenario You are planning to sell your business, a Korean BBQ restaurant in Bellevue You are forecasting sales and creating an NPV model to obtain a valuation of the business the price you hope to sell the business at Based on your most recent year, you forecast Year 1 sales at $ 300,000 Your historical Operating Margin (EBIT Margin) has been 30 , which gives a Year 1 Cash Flow in your model of $ 90,000 You decide to convince the potential buyer there is an opportunity for them to decrease Operating Expenses and so increase the Operating Margin You apply an EBIT Margin of 35 in the model, giving an increased Year 1 Cash Flow of $ 105,000 What effect does that have The NPV increases The NPV is decreases None of the above Remember, in addition to answering the question, please provide an explanation for your answer

Question

Scenario  You are planning to sell your business, a Korean BBQ restaurant in Bellevue  You are forecasting sales and creating an NPV model to obtain a valuation of the business   the price you hope to sell the business at  Based on your most recent year, you forecast Year 1 sales at $ 300,000  Your historical Operating Margin (EBIT Margin) has been 30 , which gives a Year 1 Cash Flow in your model of $ 90,000  You decide to convince the potential buyer there is an opportunity for them to decrease Operating Expenses and so increase the Operating Margin  You apply an EBIT Margin of 35  in the model, giving an increased Year 1 Cash Flow of $ 105,000  What effect does that have  The NPV increases The NPV is decreases None of the above Remember, in addition to answering the question, please provide an explanation for your answer

Accepted Answer

The Answer is in the image, click to view ...

Question

Scenario: You are planning to sell your business, a Korean BBQ restaurant in Bellevue. You are forecasting sales and creating an NPV model to obtain

Step by Step Solution

Step: 1

Get Instant Access with AI-Powered Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Financial Accounting Reporting Analysis And Decision Making

Students also viewed these Finance questions

Question

Question

Question

Question

Question

Question

Question

Question

Question