ZuoTi.Pro
Question

you are thinking about buying a Dunkin’ franchise which you expect to yield profits of $55,000...

you are thinking about buying a Dunkin’ franchise which you expect to yield profits of $55,000 per year forever. You want to earn at least 12% on your investment annually. What is the most you should pay for the franchise? Show your work.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Maximum price for franchise:

= Annual profit/Required rate

= $55,000/12%

= $458,333.33

Hence, We should not pay more than $458,333 for franchise.

0 0
Add a comment
Know the answer?
Add Answer to:
you are thinking about buying a Dunkin’ franchise which you expect to yield profits of $55,000...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Do calculations in excel and show work. You are thinking about buying an investment property in...

    Do calculations in excel and show work. You are thinking about buying an investment property in San Jose for $150,000 today. You expect to earn $10,000 per year of net rental income (after costs, such as property tax, HOA and maintenance, etc.) on the property and you expect to sell it in 5 years for $200,000. If the annual discount rate is 8%, is this investment attractive to you? (a) What is the net present value of this investment? Is...

  • You are thinking about buying a piece of art that costs $50,000. The art dealer is...

    You are thinking about buying a piece of art that costs $50,000. The art dealer is proposing a deal: She will lend you the money, and you will repay the loan by making the same payment every year for the next 10 years. If the interest rate is 4% compounded annually, how much will you have to pay every year ?

  • You are thinking about renting out your condo rather than selling it. You can get $200,000...

    You are thinking about renting out your condo rather than selling it. You can get $200,000 if you sell your condo to an eager buyer today, but only $100,000 if you wait to sell it. You expect to earn $5,000 per month (including all expenses). The discount rate of 12%. What is the minimum number of months you need to rent it out for this to be an acceptable investment? Please show your work, thank you!

  • You're thinking about buying some stock in Affiliated Computer Corporation and want to use the P/E...

    You're thinking about buying some stock in Affiliated Computer Corporation and want to use the P/E approach to value the shares. You've estimated that next year's earnings should come in at about $3.07 a share. In addition, although the stock normally trades at a relative P/E of 1.07 times the market, you believe that the relative P/E will rise to 1.13, whereas the market P/E should be around 16.6 times earnings. Given this information, what is the maximum price you...

  • 1. You are thinking of buying a miniature golf course to operate. It is expected to...

    1. You are thinking of buying a miniature golf course to operate. It is expected to generate cash flows of $45,000 per year in years one through three and $55,000 per year in years four through eight. If the appropriate discount rate is 12%, what is the most you would pay for this golf course? Show calculations 2. Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the cash flows...

  • Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the stock...

    Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the stock to pay a dividend of $0.75 per share at the end of Year 1 and $1.75 per share at the end of Year 2. You believe you can sell the stock for $15.50 at the end of Year 2. What is the value per share of the company’s stock if the required rate of return is 12 percent? Please Show Work.

  • You are thinking about buying a rental property. Because of the difficulty getting a loan, you...

    You are thinking about buying a rental property. Because of the difficulty getting a loan, you are going to pay $350,000 in cash for the house today. You think you can rent out the property for the next 10 years, receiving $1,400 in cash each month after your expenses and taxes, starting a month from today. At the end of ten years, you believe you will be able to sell the property for $425,000. If your discount rate is 7.2%...

  • 1. You are thinking about buying the Ben Paradigm for $4.95 million. The owner needs to...

    1. You are thinking about buying the Ben Paradigm for $4.95 million. The owner needs to sell soon so he says he’ll sell it to you for $4 million if you pay him $6 million in five years. What is the interest rate on this loan? 2. You are just starting graduate school part-time, and you’ve decided you want to buy a used Pete's watch when you graduate in four years. The watch will cost $34,995. You think you can...

  • 1. Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the...

    1. Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the stock to pay a dividend of $0.75 per share at the end of Year 1 and $1.75 per share at the end of Year 2. You believe you can sell the stock for $15.50 at the end of Year 2. What is the value per share of the company’s stock if the required rate of return is 12 percent? $14.42 Please Show All Work.

  • Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the stock...

    Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect the stock to pay a dividend of $0.75 per share at the end of Year 1 and $1.75 per share at the end of Year 2. You believe you can sell the stock for $15.50 at the end of Year 2. What is the value per share of the company’s stock if the required rate of return is 12 percent? $14.42 Please Show all Work Typed...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT