Location: Fortuna, CA
The attached spreadsheet is a model of the Fortuna movie theater. It is for sale in Fortuna, CA, for $1,250,000. This model includes a pro forma income statement and balance sheet for the restaurant based on market assumptions in the area and an analysis of the costs of capital and internal rate of return forecasted for the restaurant. The model allows variables to be changed for all major inputs of the computations, and includes citations for assumed values in the models.
In the model with the input values chosen, the movie theater would have a weighted average cost of capital equal 10.66%, but with an internal rate of return equal to 15.66%. Realizing that the cost of capital may be adjusted by changing the debt and equity proportions, we have attempted to do so, but no reasonable proportions work to allow the cost to be close to the 15.66% return.