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Finance

Your family leases a hotel and restaurant business. The lease is up for renegotiation. You pay the following in rent: 5% of Revenue plus $75,000 flat fee (ie Fixed Cost) Other financial data: + Present annual revenue $1.8M + Total Variable costs $700,000 + Fixed Costs $900,000 + You expect Sales activity to increase revenue by 10%. Both rental cost and rental fee form part of Total Variable Costs and Fixed Costs, respectively. You are thinking about a couple of alternatives as proposals to suggest to your landlord. Option 1: 6% rent based on revenue plus a flat fee $50,000. Option 2: 10% rent based on revenue, no flat fee. You decide to model the present circumstance and each alternative. Your task is to compare both options against the current position: 3.1. Calculate the Operating Income (before tax), and both option also, hint: create P&L, 3.2. Calculate the VC% for Option 1 & 2 3.3. How much rent is being offered in Options 1 & 2?
Your family leases a hotel and restaurant business. The lease is up for renegotiation. You pay the following in rent: 5% of Revenue plus $75,000 flat fee (ie Fixed Cost) Other financial data: + Present annual revenue $1.8M + Total Variable costs $700,000 + Fixed Costs $900,000 + You expect Sales activity to increase revenue by 10%.
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Assignment ID
24867
Discipline
Type
CREATED ON
May 2, 2016
COMPLETED ON
May 3, 2016
Price
$30
This order has already been completed on Studybay
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Latest reviews for Hopkins1
huahuaxiao
April 26, 2017
huahuaxiao
Excellent as usual!
Jesushaw
April 24, 2017
Jesushaw
Thanks so much for excellent work
taib.benkirane38
April 21, 2017
taib.benkirane38
thanks again for your great work