Miner's Mexican Grill Inc. plans to open its 100th restaurant by the end of next year. The new restaurant will require an initial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Determine the acceptability of the investment if the company's minimum attractive rate of return is 13% per year using annual worth analysis.

Question

Quizplus · Accepted Answer

The Answer of Miner's Mexican Grill Inc. plans to open its 100th restaurant by the end of next year. The new restaurant will require an initial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Determine the acceptability of the investment if the company's minimum attractive rate of return is 13% per year using annual worth analysis.