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Scenario: Your client owns a successful restaurant in downtown Chicago. The client wants to open a 2nd restaurant in the suburbs and has asked you
Scenario: | ||||||
Your client owns a successful restaurant in downtown Chicago. | ||||||
The client wants to open a 2nd restaurant in the suburbs and has asked you to help choose between | ||||||
two locations. Key information is listed below. Using the four capital budgeting methods that we have focused on | ||||||
in this module, prepare a presentation that shows your recommendation(s) to your client (and why). | ||||||
Oak Park | Rosemont | |||||
Initial Investment: | (see your specific investment amount) | |||||
Annual cash inflows: | $1,000,000 | $1,200,000 | ||||
Annual cash outflows: | $600,000 | $850,000 | ||||
Annual non-cash (all depreciation) expenses: | ||||||
Use straight line depreciation to find! | ||||||
# of years of expected useful life of project: | 25 | 30 | ||||
For both, assume no residual value and: | (investment 2,500,000 at 5% discount rate ) |
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