Location: Nampa, ID
In the attached spreadsheet is a balance sheet and income statement for Wendy’s located in Nampa, ID. Wendy’s is a very large company that started in 1969 and has grown ever since. This specific Wendy’s has a listed sale price of $2,476,190. This spreadsheet acknowledges that the computations made may be changed due to various variables. Forecasts were made based on the area of Nampa, ID and the applicable market assumptions.
In the spreadsheet, Wendy’s had a forecast weighted mortgage at 1.02%, an extra bank loan weighted at .48%, and equity weighted at 8.33%. These calculations give a forecasted WACC of 9.83% and an IRR of 5%. The debt of the company amounts to 54.63% while the equity amounts to 45.37%. Because these are fairly close, the expected success from the purchase is uncertain, but overall an IRR that is greater than or equal to the company’s cost of capital should be accepted, and a project whose IRR is less than the company’s cost of capital should be rejected.