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would you be willing to pay more than 200 000 for the restaurant near the campus exp 637482

Goodwill effect on ROI Assume that fast food restaurants generally provide an ROI of 15%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above average turnover (sales/assets). The replacement value of the restaurant’s plant and equipment is $200,000. If you were to invest that amount in a restaurant elsewhere in town, you could expect a 15% ROI.

Required:

a. Would you be willing to pay more than $200,000 for the restaurant near the campus? Explain your answer.

b. If you purchased the restaurant near the campus for $240,000 and the fair value of the assets you acquired was $200,000, what balance sheet accounts would be used to record the cost of the restaurant?

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