Question

Question 48 (4 points) Suppose that Disney decides to open a new restaurant in the Magic Kingdom theme park. The restaurant will be called the Death Star and feature Darth Vader and other characters from the film. The company has collected information regarding the restaurant shown below: Expected Yearly Revenues $5,000,000 COGS as % of Revenue 40% of sales Other Expenses as % of Revenue 27% of sales Yearly Depreciation $500,000 The new restaurant will cost $12 million to construct and get ready for operation. This will be your cash flow for year 0. Disney is viewing this project as a perpetuity as the restaurant will operate into the foreseeable future. The cost of capital for Disney is 8%, while the marginal tax rate is 34%. What is the NPV of this restaurant project?

Answer 1

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C w ENG 04:19 01-08-2020 66 34 7 Х WN181 . WE WE WG WH WI WJ WK WL WM WN WO WP WQ WR 163 164 DISNEY 165 166 CALCULATION OF OCF [OPERATING CASH FLOW] REVENUE 5000000 167 2000000 168 169 170 COGS OTHER COSTS 1350000 DEPRECIATION 500000 EBT 1150000 171 172 TAXES 391000 173 NET INCOME 759000 174 175 DEPRECIATION OCF 500000 1259000 176 177 NPV = PV OF PERPETUAL CASH FLOWS - INVESTMENT 178 NPV = 179 NPV = ANNUAL OCF/RATE - INVESTMENT 1259000/0.08 - 12000000 3737500 180 NPV = 181 182 183 184 185 Ml-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEASE SLM MACRS GOLF ...