Question

Assume that a national restaurant firm called BBQ builds 10 new restaurants at a cost of...

Assume that a national restaurant firm called BBQ builds 10 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 200,000 shares of stock at $30 per share.What is the amount of economic investment that has resulted from BBQ 's actions? how much purely financial investment took place?

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Answer #1

Cost of each restaurant = 1 million

Cost of 10 restaurents = 1x10 = 10million

Additional cost on eqiupment and furniture on 1 restaurant = 200000$

Additional cost on eqiupment and furniture on 10 restaurants = 200000x10 = 2 million

Total cost for building 10 restaurants = 10+2 = 12 million

Cost of single share = 30$

Cost of 200000 share = 30x200000 = 6 million

So the financial investment attained due to shares = 6 million

Amount that is further required to build restaurants = 12 - 6 = 6million

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