Case Study //VALUING A CHAIN OF MCDONALD'SRESTAURANTSJames and Mary Watson own a small chain of McDonald's restaurants that isvalued at $2,300,000. They believe that the chain will grow in value at 12% peryear compounded annually for the next 5 years. If they sell the chain, the fundswill be invested at a rate of 6% compounded semiannually. They expect infla-tion to be 3% per year for the next 5 years. Ignore taxes, and answer the follow-ing, rounding answers to the nearest dollar at each step.McDonald's1. Find the future value of the chain after 5 years. Then find the price they should sell thechain for if they wish to have the same future value at the end of 5 years.1.2.2. Find the future value of the chain if it grows at only 2% per year for 5 years. Then find theprice they should ask for the chain given a 2% growth rate per year.3. Use the compound amount formula to answer the following: What would the future valueof the chain be if it grew at the expected rate of inflation? Find the price they should askfor the chain if it grows at that rate.3.4. Complete the following table.Market ValueGrowth RateFuture ValueToday2%3% (inflation)12%The value of the chain varies by more than one million dollars, depending on the rate ofgrowth assumed for the business for the next 5 years.

Name: Case Study //VALUING A CHAIN OF MCDONALD'SRESTAURANTSJames and Mary W
Uploaded: 2024-03-05T11:52:21.000Z
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Description: Case Study //VALUING A CHAIN OF MCDONALD'SRESTAURANTSJames and Mary Watson own a small chain of McDonald's restaurants that isvalued at $2,300,000. They believe that the chain will grow in value at 12% peryear compounded annually for the next 5 year