The Groot is a national pie shop brand in the country of Belarus. The Groot decides to open a new pie shop in a city called Zloda. On the 1" of January 2019, it spends $800,000 to purchase the land of this shop. The Groot spends \$1,800,000 in total for the shop's exterior decoration. This cost is paid in ten equal instalments payable monthly in advance (i.e., each payment equals to $180,000 ). The first payment occurs on the 12 of October 2019. The Groot plans to open this shop on the 1" of May 2020. The numbers of pie it expects to sell each month are provided in the Excel 'STAT2032 Assignment Excel Template' (with the spreadsheet tab name 'Q2_input_data'). Each pie sells for $6. The revenues from pie sales are received continuously during each month. The Groot spends $10,000 per month to pay for staff salaries of this shop. This payment is made continuously from the 1" of May 2020. This cost increases every 1" of September by 3% per annum effective (i.c., this cost remains constant for a year after each jump). The risk discount rate (RDR) is 10\% per annum effective. IAll revenues and costs will cease at the end of 2030. a) Calculate the net present value (NPV) for the shop at the beginning of 2019. Discuss whether this shop is profitable of not based on the results. b) Calculate the discounted payback period (DPP) for the shop (to the nearest month). c) Calculate the intemal rate of retum (IRR) for the shop (to the nearest four decimal places). The Groot is a national pie shop brand in the country of Belarus. The Groot decides to open a new pie shop in a city called Zloda. On the 1" of January 2019, it spends $800,000 to purchase the land of this shop. The Groot spends \$1,800,000 in total for the shop's exterior decoration. This cost is paid in ten equal instalments payable monthly in advance (i.e., each payment equals to $180,000 ). The first payment occurs on the 12 of October 2019. The Groot plans to open this shop on the 1" of May 2020. The numbers of pie it expects to sell each month are provided in the Excel 'STAT2032 Assignment Excel Template' (with the spreadsheet tab name 'Q2_input_data'). Each pie sells for $6. The revenues from pie sales are received continuously during each month. The Groot spends $10,000 per month to pay for staff salaries of this shop. This payment is made continuously from the 1" of May 2020. This cost increases every 1" of September by 3% per annum effective (i.c., this cost remains constant for a year after each jump). The risk discount rate (RDR) is 10\% per annum effective. IAll revenues and costs will cease at the end of 2030. a) Calculate the net present value (NPV) for the shop at the beginning of 2019. Discuss whether this shop is profitable of not based on the results. b) Calculate the discounted payback period (DPP) for the shop (to the nearest month). c) Calculate the intemal rate of retum (IRR) for the shop (to the nearest four decimal places)
