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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
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JAE SMITH
February 23, 2017
JAE SMITH
excellent writer
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February 23, 2017
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February 22, 2017
emanuel60
Good job!!! thx