Solution:
a. Present sales price = $3.20/ 0.40 = $ 8.00
b. Cost one year from today = $3.20(1+ 0.05) = $3.36
c. Menu sales price in one year = $3.36/ 0.38 = $8.84 (rounded off)
7. The present cost to Lil's Restaurant for one à la carte steak is $3.20. This...
The restaurant at the Hotel Galaxy offers two choices for breakfast: an all-you-can-eat buffet and an a la carte option, where diners can order from the menu. The buffet option has a budgeted meal price of $52. The a la carte option has a budgeted average price of $41 for a meal. The restaurant manager expects that 40 percent of its diners will order the buffet option. The buffet option has a budgeted variable cost of $32 and the a...
1. Why might some prefer a prix fixe (fixed price) dinner costing about the same as an à la carte one (where you pay individually for each item)? (Assume the food is identical.) 2. Consider a person with the following utility function over wealth: u(w) = ew, where e is the exponential function (approximately equal to 2.7183) and w = wealth in hundreds of thousands of dollars. Suppose that this person has a 40% chance of wealth of $100,000 and...
Utilizing Menu Engineering Concept in a Restaurant Operation The purpose of this assignment is four fold: Step 1. To learn basic menu engineering principles Step 2. To learn menu engineering strategies Step 3. To use a spreadsheet program in generating two menu engineering reports Step 4. To evaluate the information found in the menu engineering reports using the menu engineering strategy model presented in this assignment. This will be accomplished by answering 9 questions found at the end of this...
(Individual or component costs of capital) Compute the cost of the following: a. A bond that has $1,000 par value (face value) and a contract or coupon interest rate of 7 percent. A new issue would have a floatation cost of 7 percent of the $1,135 market value. The bonds mature in 7 years. The firm's average tax rate is 30 percent and its marginal tax rate is 38 percent. b. A new common stock issue that paid a $1.50...
Pompeii Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt-equity ratio of 40 percent and makes interest payments of $54,000 at the end of each year. The cost of the firm’s levered equity is 19 percent. Each store estimates that annual sales will be $1.455 million; annual cost of goods sold will be $805,000; and annual general and administrative costs will be $465,000. These cash flows are expected to remain the same forever....
2) If a security pays $110 in one year and $133 in three years, its present value is $200 if the interest rate is A) 5 percent. B) 10 percent. C) 12.5 percent. D) 15 percent. 7) The price of a coupon bond and the interest rate are ________ related; that is, as the interest rate ________, the price of the bond ________. A) positively; rises; rises B) negatively; falls; falls C) positively; rises; falls D) negatively; rises; falls You...
4
Given a choice of two investments, would you choose one that pays a total return of 30 percent over five years or one that pays 0.5 percent per month for five years? What annual rate of return does each give you? Instructions: Enter your responses in percentages to the nearest hundredth, for example, 3.00 for 3 percent. The return of 30 percent over 5 years provides an annual return of percent. The return of 0.5 percent per month for...
Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio of 40 percent and makes interest payments of $45,000 at the end of each year. The cost of the firm’s levered equity is 24 percent. Each store estimates that annual sales will be $1.38 million; annual cost of goods sold will be $710,000; and annual general and administrative costs will be $445,000. These cash flows are expected to remain the same forever....
Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio of 40 percent and makes interest payments of $45,000 at the end of each year. The cost of the firm’s levered equity is 24 percent. Each store estimates that annual sales will be $1.38 million; annual cost of goods sold will be $710,000; and annual general and administrative costs will be $445,000. These cash flows are expected to remain the same forever....
Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt-equity ratio of 35 percent and makes interest payments of $46,000 at the end of each year. The cost of the firm's levered equity is 24 percent. Each store estimates that annual sales will be $1.4 million; annual cost of goods sold will be $720,000; and annual general and administrative costs will be $455,000. These cash flows are expected to remain the same forever....