Chat with us, powered by LiveChat Alternative #1:An owner has $200,000 to invest in - Writemia

Alternative #1:An owner has $200,000 to invest in

Alternative #1:An owner has $200,000 to invest in a new restaurant. Equipment and furnitureare to be purchased for $170,000, and $30,000 will be used for initialworking capital.First-year estimates anticipate variable costs as a percentageof sales revenue to be:food costs at 35%variable wage costs at 30%other variable costs at 15%.The owner wants an 18% operating income (BT) on his initial investment.Other fixed and semifixed cost estimates are as follows:Management salaries $49,200Rent expense 32,000Insurance expense 4,800Depreciation, furniture, and equipment 20%Alternative #2:The owner is considering borrowing $60,000 from a bank at an 8% interest rate instead of using his own money for the investment.Rather than purchasing $40,000 of the needed equipment, itwould be rented at a cost of $10,000 per year.Analyze each alternative,(1) using invested capital or(2) borrowing $60,000, and renting some of the equipment.Calculate the annual sales revenue needed to provide an18% operating income (BT) of the initial investment.Recommend to the owner how to finance the operation.NOTE:

Do you need an answer to this or any other questions?

About Writemia

We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.

How It Works

To make an Order you only need to click on “Place Order” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.

Are there Discounts?

All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.

Hire a tutor today CLICK HERE to make your first order