Assume that fast-food restaurants generally provide an ROI of 12%, but that such a restaurant near a college campus has an ROI of 15% because its relatively large volume of business generates an above-average tunover (sales/assets). The replacement value of the restaurant's plant and equipment is $600,000 If you were to invest that amount in a restaurant elsewhere in town, you could expect a 12% ROI. Required: a-1. Would you be willing to pay more than $600,000 for the restaurant near the campus? Yes a-2. What is the maximum price you would be willing to pay for the business? Maximum Price b. If you purchased the restaurant near the campus for $750,000 and the fair value of the assets you acquired was $600 000 identify the account along with ts balance that is used to record the additional amount paid over the fair value of the assets

Assume that fast-food restaurants generally provide an ROI of 12%, but that such a restaurant near a college campus has an ROI of 15% because its relatively large volume of business generates an above-average tunover (sales/assets). The replacement value of the restaurant's plant and equipment is $600,000 If you were to invest that amount in a restaurant elsewhere in town, you could expect a 12% ROI. Required: a-1. Would you be willing to pay more than $600,000 for the restaurant near the campus? Yes a-2. What is the maximum price you would be willing to pay for the business? Maximum Price b. If you purchased the restaurant near the campus for $750,000 and the fair value of the assets you acquired was $600 000 identify the account along with ts balance that is used to record the additional amount paid over the fair value of the assets

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The communication process consists of many stages. In which stage of the communication the receiver interprets the message and translates it into meaningful information? O a. Feedback O b. Noise Oc. Encoding O d. Decoding
In your own words explain the agency theory and give atleast2 personal experience.
CAN I SEE THE MANUAL WORKING OF THE PROBLEM
PLEASE EXPLAIN EACH POINT STEP BY STEP
Can you further explain this to me to better understand the concept on what I'm supposed to do and what formulas I need to apply.
1. What is a case and how to defining the Case and Creating Problem Statements? 2. What is Background of the Problem and Problem Statement?
What information is provided by this statement? Describe the steps to create the statement - choose either the direct or indirect method in your response.
list and define the enhancing qualities of useful information
4. Explain Ted's strategy to justify his request and include a list of items Ted might ask for?
Match each of the components of relevance with its definition. Relevance Definitions 1 . Confirmatory value 2 . Predictive value 3 . Materiality a. Information is useful in helping to forecast future outcomes. b. Information provides feedback on past activities. c. The nature or amount of an item has the ability to affect decisions.
The response provided is very brief, i need more explanation and analysis