6. The following are options for increasing the return on Mr. Moore’s retirement

ID: 2537724 • Letter: 6

Question

6. The following are options for increasing the return on Mr. Moore’s retirement income (as calculated in number 5 ): Work a little longer, invest at a higher rate of return, sell the business for more (that is, increase “PV”), increase the number of years for which the money is invested, wait to become eligible for social security payments T/F

Moore's Spreaesheet-Hnal 3) Compabblry Mode Exce Irsat Page Layou Fomu D RaviVi Hl Tel me what you wan to do 2 Moares Familay Restaurant Financial Data 3Income & Expensn statcment Historic pertormance 10ld Business Modell Change $0.,?34,COU $1,b//,120 $1,b15,/50 S4R5,000 $714,250 $784,963 $295,000 $294,355 292,515 $1,t 20,U60 $797,211 330,772 -y. Atr% 64.37% 10.77% $56,000 $61,425 ssa,047 567,721 15.76% 57,560 20,000 ss,801 957,729 ss,sns ,sa5 S9,072 21,000 s25,000 $29,000 $13,000 Ser,200 5.3bO $1,227,287 $1.344,495 $1.441,783 $449,833 $291,254 $178,277 20.00% 45.00% 420.vr% S0.54% 78.65% 12 Scrviccacccunting.trash,clcaning, ctc 1 Earnings Bcforc Interest, Income Taxcs,& Depreciation (EBITD) $8 $234,156 $125,953 $81,551 $49,918 .78.68%. 13 Dcoreciation on valuss 312.000.00 279.520.00 261,720.00 249,240.00-20.12% 21 Avcrage Maal Valuc Moore's Historical Data(Old O lype hene to search 2

Explanation / Answer

Moores Family Restaurant financial data

Budget worksheet

2013

2014

2015

Sales

1575396

1696296

1923598

Cost of product

697211

597211

644987.3

Labour

330772

340695

350915.9

Benefits

79872

114519

Utilities

54340

50644

58241

Loan principle repayments

Insurance and property taxes

110000

Services

41051

43908

46103.4

Other

77629

84771

93248

Total cost

1390875

1341748

1418015

Earnings before interest and taxes

184521

354548

505583.4

Interest on loan

3500

3000

Income taxes

51666

99273

141563.3

Depreciation on values

71176

61777

61177

Interest, taxes and depreciation total

126342

164050

205740.3

Earnings after interest, income taxes and depreciation

58179

190498

299843

Meals sold

233392

242328

261714

Average meal value

6.75

7.35

2.987296

2.464474

In case of labour expenditures an increase of 3% has been adjusted from the previous based on the last years’ experience.

In respect of services, i.e. accounting and other expenses have been increased by 5% in the year 2015.

In respect of taxes the rate of tax has been taken at 28% considering the past income and taxes.