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Today, the renovation of Donald's restaurant has been completed. Donald calculates that the renovation and...

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Accounting

Today, the renovation of Donald's restaurant has been completed. Donald calculates that the renovation and other related expenses total $24,000 on the completion date (i.e. today). He believes that the renovation will bring in additional profit for his restaurant.

Donald plans to sell his restaurant after 6 years. He would like to see an effective annual return of 27.1% on his investment (i.e. the renovation).

a) What is the minimum additional level weekly profit (paid at the end of each week) that would need to be generated over the next 6 years for Donald to achieve his return of 27.1%? For the purposes of this part only, assume there are no other additional profits resulting from the renovation. (1 mark)

b) After further consideration, Donald believes that the renovation would also allow him to sell his restaurant for an additional $30,000 in 6 years' time. What is the new minimum additional level weekly profit that would need to be generated over the next 6 years for Donald to achieve his return of 27.1%? (1 mark)

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