On January 1, 2022, Blight Stones obtained a franchise from Doug Corporation to sell for 20 years Doug’s product. The initial franchise fee as agreed upon shall be P6,000,000, and shall be payable in cash, P1,000,000, when the contract is signed and the balance in four equal installments thereafter, as evidenced by a noninterest bearing note. The agreement provides that the franchisor shall provide the necessary initial services required under a franchise contract. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor. Revenue from the franchise for 2022 was P5,000,000. The present value factor of P1 at 12% for 4 periods 0.6355 The present value factor of P1 ordinary annuity at 12% for 4 periods 3.0373 23) How much is the initial cost of the franchise? 24) How much is the total expenses for the year 2022?
On January 1, 2022, Blight Stones obtained a franchise from Doug Corporation to sell for 20 years Doug’s
product. The initial franchise fee as agreed upon shall be P6,000,000, and shall be payable in cash, P1,000,000,
when the contract is signed and the balance in four equal installments thereafter, as evidenced by a noninterest bearing note. The agreement provides that the franchisor shall provide the necessary initial services
required under a franchise contract. The agreement also provides that 5% of the revenue from the franchise
must be paid to the franchisor. Revenue from the franchise for 2022 was P5,000,000.
The present value factor of P1 at 12% for 4 periods 0.6355
The present value factor of P1 ordinary annuity at 12% for 4
periods
3.0373
23) How much is the initial cost of the franchise?
24) How much is the total expenses for the year 2022?
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