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unit4 q1 Ryan Huston's lifelong dream is to own a restaurant. He owns a premium site for a restaurant across the street from the local
unit4 q1
Ryan Huston's lifelong dream is to own a restaurant. He owns a premium site for a restaurant across the street from the local university. Now he needs to decide what kind of restaurant to open. Recently, Ryan began to investigate one of the fastest-growing fast-food franchises in the country, Chuck's Chicken Shack. A Chuck's Chicken Shack franchise costs $72,000, an amount that is amortized over 15 years. As a franchisee, Ryan would need to adhere to the company's building specifications. The building would cost an estimated $1,080,000 and would have a $120,000 salvage value at the end of its 15- year life. The restaurant equipment (fryers, steam tables, booths, counters) is sold as a package by the corporate office at a cost of $480,000, will have a salvage value of $24,000 at the end of its five-year , and must be replaced every five years Ryan estimates the annual revenue from a Chuck's Chicken Shack franchise at $2,280,000. Food costs typically run 36% of revenue. Annual operating expenses, not including depreciation, total $1,020,000 For financial reporting purposes, Ryan will use straight-line depreciation and amortization. Based on past experience, he uses a 16% discount rateStep by Step Solution
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