9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)
9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)
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