Your brother, a new college graduate, wants to be his own boss. He wants to open a restaurant in a small strip center or acquire and operate a food truck, an increasingly popular mode of eating, especially in larger cities. The restaurant space can be rented for $2200 per month. Modest furnishings and used equipment will have a first cost of $26,000. Income is expected to be $14,100 per month, with expenses for utilities, labor, taxes, etc. expected to average $3700 per month. Alternatively, a kitchen-ready food truck will cost $17,900 to purchase and $900 per month to operate. Income is expected to be $6200 per month. If the salvage values are assumed to be 10% of the first cost for the restaurant and 35% of the first cost of the truck after a 5-year planning period, which alternative is better on the basis of an annual worth comparison at an interest rate of 12% per year, compounded monthly? Also, write the spreadsheet functions to find the AW values.
Your brother, a new college graduate, wants to be
his own boss. He wants to open a restaurant in a
small strip center or acquire and operate a food truck, an increasingly popular mode of eating, especially
in larger cities. The restaurant space can
be rented for $2200 per month. Modest furnishings
and used equipment will have a first cost of
$26,000. Income is expected to be $14,100 per
month, with expenses for utilities, labor, taxes, etc.
expected to average $3700 per month. Alternatively,
a kitchen-ready food truck will cost $17,900
to purchase and $900 per month to operate. Income
is expected to be $6200 per month. If the
salvage values are assumed to be 10% of the first
cost for the restaurant and 35% of the first cost of
the truck after a 5-year planning period, which alternative
is better on the basis of an annual worth
comparison at an interest rate of 12% per year,
compounded monthly? Also, write the spreadsheet
functions to find the AW values.
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