After a trip to Bordeaux France you are considering opening a restaurant based on Restaurant L'Entrecote. You will offer a fixed menu of salad, steak and French fries. Your innovation is that you will use a bordelaise (red wine) sauce instead of a tarragon butter sauce. You plan to run the restaurant for two years and then retire. Start-up costs, to be incurred immediately, are $500,000. Start-up costs include kitchen equipment, kitchen supplies, renovations, furniture, fixtures, and the point-of-sales system.
Assume that all of those assets are classified as 5-year property. The assets can be sold for $150,000 after two years.
You expect 100 diners per night. The restaurant will be open for 300 nights per year. The average diner orders food with a menu price of $35 and beverages with a menu price of $15. Food costs are 34% of the menu price and beverage costs are 50% of the menu price.
The nightly wages are $2,160 (for the chef, 5 kitchen staff, a bartender, the Maitre d' and 10 wait staff). Municipal tax, rent, and utilities, are $41,400 per annum.
Assume that all revenues and operating expenses are received (paid) at the end of each year.
The small business tax rate is 20%. The cost of capital is 10%.
When the restaurant opens you will have to invest in an inventory of wine, beer and liquor costing $50,000. What is initial cash flow for the L'Entrecote project?
MACRS Depreciation Rates
| Year | 3-Year | 5-Year |
| 1 | 33.33% | 20.00% |
| 2 | 44.45% | 32.00% |
◦ -$50,000
◦ -$175,000
◦ -$275,000
◦ -$500,000
◦ -$550,000
Tracheostomy. A tracheotomy, or incision into the trachea, is performed to create an opening into th
The same star field photographed with (a) a ground-based telescope, which is subject to poor seeing
Ethnic Differences in Financial Support for College Based on a sample of 304 emerging adults aged 2
Cave painting at Lascaux, France
Holland’s six basic types of people based on vocational interests (attitudes, abilities, and ...
Gallbladder opening showing gallstones.