Smoothy Smoothies, a Florida- Based Chain That Sells Shakes, Juices

Essay

Smoothy Smoothies, a Florida- based chain that sells shakes, juices, salads, wraps, and soups, plans to develop franchises in central Tennessee. Each new store will require an initial investment of $270,000 and a monthly operating cost of $25,000. Each will have a
$78,500 salvage value after 5 years. The company also estimates that a new store will bring in revenue of $40,000 each month. Determine the acceptability of the investment if the company's minimum attractive rate of return is 8% per year, compounded monthly, using the annual worth analysis.