You are the Vice President for Operations at Taqueria Auténtica, an authentic Mexican taco restaurant expanding quickly throughout Texas. The company wants to invest in corporate owned chains for five years, prove the marke concepts, and then sell them off as franchises after they have demonstrated proof of concept to potential owners. You have spent some time looking at potential locations in Granbury and Stephenville. Based on the specific locations the start-up costs would be $671,258 for Granbury, and $883,695 for Stephenville. The business risk at each location would be similar to risks at the overall corporation, and should require a weighted average cost of capital of 7.12%. The investment in one location does not affect the ability of the company to invest at the other location in any way. Calculate the net present value of both projects, and enter in the box below how much the value of the firm is expected to increase based on this capital budget (please enter the amount to the nearest penny). Stephenville Granbury

You are the Vice President for Operations at Taqueria Auténtica, an authentic Mexican taco restaurant expanding quickly throughout Texas. The company wants to invest in corporate owned chains for five years, prove the marke concepts, and then sell them off as franchises after they have demonstrated proof of concept to potential owners. You have spent some time looking at potential locations in Granbury and Stephenville. Based on the specific locations the start-up costs would be $671,258 for Granbury, and $883,695 for Stephenville. The business risk at each location would be similar to risks at the overall corporation, and should require a weighted average cost of capital of 7.12%. The investment in one location does not affect the ability of the company to invest at the other location in any way. Calculate the net present value of both projects, and enter in the box below how much the value of the firm is expected to increase based on this capital budget (please enter the amount to the nearest penny). Stephenville Granbury

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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