Carni Vore represents a meat sandwich restaurant chain that is expandinginto a new, large metropolitan area. He currently has $2 million to investand wants to open several restaurants. He found that each site will require acash outlay of $230,000 for leasing, equipment, and initial inventory. Carniis currently looking at 20 sites. The first 15 sites have positive net presentvalues; sites 16 through 20 have negative net present values.a. What is the maximum number of restaurants that Carni can establish for hiscompany? Explain.b. How many restaurants can Carni open if his employer increases his budgetto $5 million? Explain.
Carni Vore represents a meat sandwich restaurant chain that is expandinginto a new, large metropolitan area. He currently has $2 million to investand wants to open several restaurants. He found that each site will require acash outlay of $230,000 for leasing, equipment, and initial inventory. Carniis currently looking at 20 sites. The first 15 sites have positive net presentvalues; sites 16 through 20 have negative net present values.a. What is the maximum number of restaurants that Carni can establish for hiscompany? Explain.b. How many restaurants can Carni open if his employer increases his budgetto $5 million? Explain.
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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Question
Carni Vore represents a meat sandwich restaurant chain that is expanding
into a new, large metropolitan area. He currently has $2 million to invest
and wants to open several restaurants. He found that each site will require a
cash outlay of $230,000 for leasing, equipment, and initial inventory. Carni
is currently looking at 20 sites. The first 15 sites have positive net present
values; sites 16 through 20 have negative net present values.
a. What is the maximum number of restaurants that Carni can establish for his
company? Explain.
b. How many restaurants can Carni open if his employer increases his budget
to $5 million? Explain.
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