KARAOKE PUB CAPITAL INVESTMENT ANALYSIS

Beach Karaoke Pub Pro Forma (Self Operate)

Capital Expenses
Capital Expenditure
FF&E
Total Capital Expenditure

Low
800,000
900,000
1,700,000

High
1,200,000
900,000
2,100,000

Sales
Total Covers
Walk-Ins

50%

64 per day
32 per day

Hotel Guests

50%

32 per day

Avg Check
Avg Check Growth Rate
Days/Years
Total Sales
Total Tables
Table Turns
Hours of Operation
Costs
F&B Costs
Salaries (1)
Other Operating (2)
Repairs & Maintenance
Depreciation FF&E
- Straight Line
- Salvage
Depreciation Capex

$200 each
5% per year
365
$4,672,000 Year 1
32
2
7 hours

25%
0%
22%
10,000
6

Sales
Sales
Sales
Year

Pro Forma Cash Flow

Capital Investment
Capital Expenditure
Depreciation
Salvage (after tax 30%)
Capital Expenditure
Pro Forma Income Statement
Total Revenues less Erosion
Pub Revenues
Covers/Year
Avg Check
Avg Check Growth
Rooms Revenue Erosion
Projected Rooms Revenue
Erosion Rate
Total Costs
F&B Costs
Salaries
Other Operating
Repairs & Maintenance
Depreciation
EBIT
Less: Tax

$0.00
6

Notes

Net Income
Operating Cash Flow (OCF)
OCF

(1) Assumes 0% of Sales instead of 16% of Sales because

employees are already under a longterm employment
contract with the hotel and, therefore an irrelevant cost for
this scenario.

Net Working Capital (NWC)

Change in NWC

(2) Assumes Other Operating includes the $55K of allocated

Shared Facility costs assumed in the Planet Karaoke Pub
scenario.

Project Cash Flows

OCF
Capital Expenditure
Change in NWC

CFFA
Investment Metrics & Decision Criteria
Discount Rate
ROI (Average)
NPV
IRR
EAV
Profitability Index
Payback
Discounted Payback

Year 0

283,333

283,333

283,333

283,333

$1,700,000

$1,700,000

0.25
0
0.22
10000

30%

$0

$0

$0

$0

$3,352,000

$3,559,200

$3,737,180

$3,924,024

$4,672,000
23,360
$200

$4,905,600
23,360
$210
5%

$5,150,880
23,360
$221
5%

$5,408,424
23,360
$232
5%

$(1,320,000)
13,200,000
10%

$(1,346,400)
13,464,000
10%

$(1,413,700)
14,137,000
10%

$(1,484,400)
14,844,000
10%

$2,205,840
1,168,000
1,027,840
10,000

$2,315,632
1,226,400
1,079,232
10,000

$2,430,914
1,287,720
1,133,194
10,000

$2,551,959
1,352,106
1,189,853
10,000

283,333

283,333

283,333

$862,827

$960,235

258,848

288,070

306,880

326,619

$603,979

$672,164

$716,053

$762,112

$887,312

$955,498

$999,386

$1,045,445

$887,312
-

$955,498
-

$999,386
-

$1,045,445
-

$1,022,933

283,333
$1,088,731

$0

$0
1,700,000
-

Decision Criteria
10.75%
61.0%
$2,641,320
52.5%
$619,856
2.55
1.850539028
2.153794196

$(1,700,000)

PV Fut CFFA

$887,312

$955,498

$999,386

$1,045,445

52.2%

56.2%

58.8%

61.5%

$801,185

$779,008

$735,703

$694,907

283,333
$0

283,333
$0

$4,164,845

$4,418,487

$5,678,845
23,360
$243
5%

$5,962,787
23,360
$255
5%

$(1,514,000)
15,140,000
10%

$(1,544,300)
15,443,000
10%

$2,679,057
1,419,711
1,249,346
10,000

$2,812,510
1,490,697
1,311,813
10,000

$1,202,455

283,333
$1,322,644

360,736

396,793

$841,718

$925,851

$1,125,052

$1,209,184

Discount Rate

283,333

No. of Tables

Discount Rate

$1,125,052
-

$1,209,184
-

scount Rate

$0

NI%
18.0%
38
36
34
32
30
28
26
24

3.5
29.5%
29.0%
28.4%
27.8%
27.0%
26.1%
25.1%
23.8%

3.0
28.0%
27.4%
26.7%
25.9%
24.9%
23.8%
22.5%
20.8%

EAV ($000)
$619.9
5.75%
6.75%

$1,700
$683.9
$671.4

$1,800
$663.8
$650.6

7.75%
8.75%
9.75%
10.75%
11.75%
12.75%

$658.7
$645.9
$632.9
$619.9
$606.7
$593.4

$637.2
$623.7
$610.1
$596.4
$582.5
$568.6

Profit Index
2.55
5.75%
6.75%
7.75%
8.75%
9.75%
10.75%
11.75%
12.75%

$1,700
2.99
2.90
2.80
2.72
2.63
2.55
2.48
2.41

$1,800
2.83
2.74
2.65
2.57
2.49
2.41
2.34
2.27

EAV ($000)
$619.9
5.75%
6.75%
7.75%
8.75%
9.75%
10.75%

0.0%
$1,684.4
$1,670.9
$1,657.3
$1,643.6
$1,629.7
$1,615.8

Table Turns
2.5
2.0
25.7%
22.0%
24.9%
20.8%
24.0%
19.5%
22.9%
18.0%
21.7%
16.2%
20.2%
14.0%
18.4%
11.3%
16.2%
7.8%

Capital Expenditure ($000)

$1,900
$2,000
$643.6
$623.4
$629.7
$608.9
$615.7
$601.6
$587.3
$572.9
$558.4
$543.7

$594.3
$579.5
$564.5
$549.5
$534.2
$518.9

Capital Expenditure ($000)

$1,900
$2,000
2.68
2.54
2.59
2.46
2.51
2.38
2.43
2.31
2.36
2.24
2.28
2.17
2.22
2.11
2.15
2.04

Erosion Rate of Guest Rooms Revenue

5.0%
10.0%
15.0%
$1,184.2
$683.9
$183.7
$1,171.1
$671.4
$171.6
$1,158.0
$658.7
$159.4
$1,144.7
$645.9
$147.0
$1,131.3
$632.9
$134.5
$1,117.8
$619.9
$121.9

$1,209,184

66.2%

71.1%

$675,233

$655,285

Discount Rate

$1,125,052

11.75%
12.75%
30.0%
45.0%
60.0%
75.0%
90.0%
105.0%
120.0%
135.0%

$1,601.7
$1,587.6
$1,329.9
$1,090.8
$843.5
$591.3
$336.5
$80.1
-$177.0
-$434.4

$1,104.2
$1,090.5
$839.4
$605.0
$361.3
$112.1
-$140.4
-$394.8
-$650.4
-$906.6

$606.7
$593.4
$349.0
$119.2
-$120.8
-$367.1
-$617.2
-$869.8
-$1,123.8
-$1,378.8

$109.2
$96.3
-$141.4
-$366.6
-$602.9
-$846.3
-$1,094.1
-$1,344.8
-$1,597.3
-$1,850.9

Turns
1.0
-6.9%
-11.8%
-17.9%
-25.9%
-36.4%
-51.2%
-73.6%
-111.0%

1.0
-6.9%
-11.8%
-17.9%
-25.9%
-36.4%
-51.2%
-73.6%
-111.0%

$2,100
$603.2
$588.1

$2,200
$583.1
$567.3

$572.8
$557.4
$541.7
$526.0
$510.1
$494.0

$551.3
$535.2
$519.0
$502.5
$485.9
$469.2

$2,100
2.42
2.35
2.27
2.20
2.13
2.07
2.01
1.95

$2,200
2.31
2.24
2.17
2.10
2.03
1.97
1.91
1.86

st Rooms Revenue
20.0%
-$316.5
-$328.2
-$339.9
-$351.8
-$363.9
-$376.1

25.0%
-$816.7
-$827.9
-$839.2
-$850.7
-$862.3
-$874.0

1 Change of Top
2 Change of Left

diture ($000)
$100 Change of Top
1.0% Change of Left
$1,700 Input for CapEx

diture ($000)

5.0% Change of Top

1.0% Change of Left
15.0% Change of Left
$500,230 Change in EAV with 5% Erosion change
$13,836 Change in EAV with 1% Discount Rate Change

-$388.4
-$400.8
-$631.8
-$852.4
-$1,085.0
-$1,325.5
-$1,571.0
-$1,819.8
-$2,070.7
-$2,323.1

-$885.9
-$897.9
-$1,122.2
-$1,338.2
-$1,567.2
-$1,804.7
-$2,047.8
-$2,294.8
-$2,544.2
-$2,795.3

KARAOKE PUB CAPITAL INVESTMENT ANALYSIS

Planet Karaoke Pub Pro Forma (Lease)
Capital Expenses
Capital Expenditure
FF&E
Total Capital Expenditure

Low
770,000
770,000

Lease Proceeds
Base Lease Payment
Growth Rate Years 1-2
Growth Rate Years 3-4

$170,000 per Month

0%
5%

Costs
Pro Rata Shared Facilities
Repairs & Maintenance
Depreciation FF&E
- Straight Line
- Salvage
Depreciation Capex

High
1,000,000
1,000,000

55,000 Year
10,000 Year
4
$0.00
4

Year 0
Capital Investment
Capital Expenditure
Depreciation
Salvage (after tax 30%)
Capital Expenditure

192,500

192,500

$770,000

$770,000

Pro Forma Income Statement

Total Lease Proceeds less Erosion
Lease Proceeds
Pmt Annual Growth Rate
Rooms Revenue Erosion
Projected Rooms Revenue
Erosion Rate
Total Costs
Shared Facilities
Repairs & Maintenance

55000
10000

$0

$0

$720,000

$693,600

$2,040,000

$2,040,000
0%

$(1,320,000)
13,200,000
10%

$(1,346,400)
13,464,000
10%

$65,000
55,000
10,000

$65,000
55,000
10,000

Depreciation

192,500

192,500

EBIT

$462,500

$436,100

138,750

130,830

Net Income

$323,750

$305,270

Operating Cash Flow (OCF)

OCF

$516,250

$497,770

$516,250
$516,250

$497,770
$497,770

Less: Tax

30%

Net Working Capital (NWC)

Change in NWC
Project Cash Flows
OCF
Capital Expenditure
Change in NWC
CFFA
Investment Metrics & Decision Criteria

$0

$0
770,000
$(770,000)

Discount Rate
ROI (Average)
NPV
IRR
EAV
Profitability Index
Payback
Discounted Payback

10.75%
67.7%
$850,233
55.5%
$272,591
2.10
1.491525424
1.651864407

PV of CFFA

67.0%

64.6%

$466,140

$405,827

192,500

192,500

$0

$0

$728,300

$764,700

$2,142,000
5%

$2,249,100
5%

$(1,413,700)
14,137,000
10%

$(1,484,400)
14,844,000
10%

$65,000
55,000
10,000

$65,000
55,000
10,000

192,500

192,500

$470,800

$507,200

141,240

152,160

$329,560

$355,040

$522,060

$547,540

6
Lease Growth Rate

Discount Rate

Discount Rate

EAV ($000)
$272.6
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%

$200
$556.2
$544.6
$533.1
$521.6
$510.2
$498.9
$487.7
$476.5

Base Lease Month

$190
$468.2
$457.2
$446.2
$435.4
$424.6
$413.8
$403.2
$392.5

EAV ($000)
$272.6

$770

$800

5.75%
6.75%
7.75%
8.75%
9.75%
10.75%
11.75%
12.75%

$299.2
$293.9
$288.6
$283.3
$278.0
$272.6
$267.2
$261.7

$290.5
$285.1
$279.6
$274.1
$268.6
$263.0
$257.3
$251.7

Profit Index
2.10
5.75%
6.75%
7.75%
8.75%
9.75%
10.75%
11.75%
12.75%

Capital Expen

Capital Expen
$770
2.35
2.30
2.25
2.20
2.15
2.10
2.06
2.02

$800
2.27
2.21
2.16
2.12
2.07
2.03
1.98
1.94

$0

$547,540
$547,540

iscount Rate

$522,060
$522,060

EAV ($000)
$272.6
5.75%
6.75%
7.75%
8.75%
9.75%

0.0%
$1,270.2
$1,264.5
$1,258.8
$1,253.0
$1,247.3

Erosion Rate of Gu
5.0%
$784.7
$779.2
$773.7
$768.2
$762.6

71.1%

$384,317

$363,949

Discount Rate

67.8%

10.75%
11.75%
12.75%
50.0%
75.0%
100.0%
125.0%
150.0%
175.0%
200.0%
225.0%

$1,241.4
$1,235.6
$1,229.7
$991.7
$818.1
$638.2
$454.3
$267.7
$79.4
-$110.0
-$300.2

$757.0
$751.4
$745.7
$514.0
$343.3
$165.5
-$16.8
-$202.1
-$389.3
-$578.0
-$767.5

Base Lease Monthly Payment ($000)

$180
$170
$160
$380.2
$292.2
$204.3
$369.8
$282.4
$195.0
$359.4
$272.6
$185.8
$349.1
$262.9
$176.6
$338.9
$253.2
$167.5
$328.7
$243.6
$158.5
$318.6
$234.0
$149.5
$308.5
$224.5
$140.5

Capital Expenditure ($000)

$850
$900
$950
$276.2
$270.4
$264.6
$258.8
$252.9
$246.9
$241.0
$234.9

$261.9
$255.8
$249.6
$243.4
$237.2
$230.9
$224.6
$218.2

$247.5
$241.1
$234.6
$228.1
$221.5
$214.9
$208.2
$201.5

Capital Expenditure ($000)

$850
$900
$950
2.13
2.01
1.91
2.08
1.97
1.86
2.04
1.92
1.82
1.99
1.88
1.78
1.95
1.84
1.74
1.91
1.80
1.71
1.87
1.76
1.67
1.83
1.72
1.63

Erosion Rate of Guest Rooms Revenue

10.0%
15.0%
20.0%
$299.2
-$186.4
-$671.9
$293.9
-$191.4
-$676.7
$288.6
-$196.4
-$681.5
$283.3
-$201.5
-$686.4
$278.0
-$206.7
-$691.3

$150
$116.3
$107.6
$98.9
$90.4
$81.8
$73.3
$64.9
$56.5

$10 Change of Top

1.0% Change of Left
$170 Input for Lease Pmt

$1,000

$50 Change of Top

$233.2
$226.4
$219.6
$212.7
$205.8
$198.9
$191.8
$184.8

1.0% Change of Left

770 Input for CapEx

$1,000
1.81
1.77
1.73
1.69
1.66
1.62
1.59
1.55

25.0%
-$1,157.4
-$1,162.0
-$1,166.6
-$1,171.2
-$1,175.9

5.0% Change of Top

1.0% Change of Left
25.0% Change of Left
$485,530 Change in EAV with 5% Erosion change
$5,791 Change in EAV with 1% Discount Rate Change

$272.6
$267.2
$261.7
$36.3
-$131.5
-$307.2
-$487.8
-$671.8
-$858.1
-$1,045.9
-$1,234.9

-$211.8
-$217.0
-$222.3
-$441.4
-$606.3
-$779.8
-$958.9
-$1,141.6
-$1,326.9
-$1,513.9
-$1,702.2

-$696.2
-$701.2
-$706.3
-$919.1
-$1,081.2
-$1,252.5
-$1,429.9
-$1,611.4
-$1,795.7
-$1,981.9
-$2,169.5

-$1,180.7
-$1,185.4
-$1,190.3
-$1,396.8
-$1,556.0
-$1,725.2
-$1,900.9
-$2,081.2
-$2,264.4
-$2,449.9
-$2,636.8

AV with 5% Erosion change

AV with 1% Discount Rate Change

KARAOKE PUB CAPITAL

INVESTMENT ANALYSIS
Pro Forma Summaries

Beach Karaoke Pub Pro Forma (S

Year 0
Capital Investment
Capital Expenditure
Depreciation
Salvage (after tax 30%)
Capital Expenditure

1,700,000
1,700,000

283,333
-

283,333
-

3,352,000
2,205,840
283,333

3,559,200
2,315,632
283,333

EBIT

862,827

960,235

Less: Tax

258,848

288,070

Net Income

603,979

672,164

Operating Cash Flow (OCF)

OCF

887,312

955,498

1,700,000
(1,700,000)

887,312
887,312

955,498
955,498

Pro Forma Income Statement

Total Revenues less Erosion
Total Costs
Depreciation

Net Working Capital (NWC)

Change in NWC
Project Cash Flows
OCF
Capital Expenditure
Change in NWC
CFFA

Investment Metrics & Decision Criteria

Discount Rate
ROI (Average)
NPV
IRR
EAV
Profitability Index
Payback
Discounted Payback

BEACH KARAO

Discount Rate
Erosion Rate

EAV ($000)
$619.9
5.8%
6.8%
7.8%
8.8%
9.8%
10.8%
11.8%
12.8%

Capital Expenditur
$1,700
$683.9
$671.4
$658.7
$645.9
$632.9
$619.9
$606.7
$593.4

10%

$1,800
$663.8
$650.6
$637.2
$623.7
$610.1
$596.4
$582.5
$568.6

Karaoke Pub Pro Forma (Self Operate)

3

Planet Karaoke Pub P

5

Year 0

283,333
-

283,333
-

283,333
-

283,333
-

770,000
770,000

192,500
-

3,737,180
2,430,914
283,333

3,924,024
2,551,959
283,333

4,164,845
2,679,057
283,333

4,418,487
2,812,510
283,333

720,000
65,000
192,500

1,022,933

1,088,731

1,202,455

1,322,644

462,500

306,880

326,619

360,736

396,793

138,750

716,053

762,112

841,718

925,851

323,750

999,386

1,045,445

1,125,052

1,209,184

516,250

999,386
999,386

1,045,445
1,045,445

1,125,052
1,125,052

1,209,184
1,209,184

770,000
(770,000)

516,250
516,250

10.75%
61.0%
$2,641,320
52.5%
$619,856
2.55
1.850539028
2.153794196
BEACH KARAOKE

Investment Metrics & Decision Criteria

Discount Rate
ROI (Average)
NPV
IRR
EAV
Profitability Index
Payback
Discounted Payback

PLAN

$2,100
$603.2
$588.1
$572.8
$557.4
$541.7
$526.0
$510.1
$494.0

$2,200
$583.1
$567.3
$551.3
$535.2
$519.0
$502.5
$485.9
$469.2

Discount Rate

Capital Expenditure ($000)

$1,900
$2,000
$643.6
$623.4
$629.7
$608.9
$615.7
$594.3
$601.6
$579.5
$587.3
$564.5
$572.9
$549.5
$558.4
$534.2
$543.7
$518.9

EAV ($000)
$272.6
5.8%
6.8%
7.8%
8.8%
9.8%
10.8%
11.8%
12.8%

Capital E
$770
$299.2
$293.9
$288.6
$283.3
$278.0
$272.6
$267.2
$261.7

10%

Planet Karaoke Pub Pro Forma (Lease)

2

B
5

Year 0

192,500
-

192,500
-

192,500
-

930,000
930,000

693,600
65,000
192,500

728,300
65,000
192,500

764,700
65,000
192,500

436,100

470,800

507,200

130,830

141,240

152,160

305,270

329,560

355,040

497,770

522,060

547,540

497,770
497,770

522,060
522,060

547,540
547,540

930,000
(930,000)

cs & Decision Criteria

10.75%
67.7%
$850,233
55.5%
$272,591
2.10
1.491525424
1.651864407
PLANET KARAOKE

Investment Metrics & Decision Criteria

Discount Rate
NPV
IRR
EAV

Bundled
EAV ($000)

$950
$247.5
$241.1
$234.6
$228.1
$221.5
$214.9
$208.2
$201.5

$1,000
$233.2
$226.4
$219.6
$212.7
$205.8
$198.9
$191.8
$184.8

Discount Rate

$800
$290.5
$285.1
$279.6
$274.1
$268.6
$263.0
$257.3
$251.7

Capital Expenditure ($000)

$850
$900
$276.2
$261.9
$270.4
$255.8
$264.6
$249.6
$258.8
$243.4
$252.9
$237.2
$246.9
$230.9
$241.0
$224.6
$234.9
$218.2

Bundled
EAV ($000)
$347.3
5.75%
6.75%
7.75%
8.75%
9.75%
10.75%
11.75%
12.75%

Bundled/Combined
1

90,833
-

90,833
-

90,833
-

90,833
-

283,333
-

283,333
-

2,632,000
2,140,840
90,833

2,865,600
2,250,632
90,833

3,008,880
2,365,914
90,833

3,159,324
2,486,959
90,833

4,164,845
2,679,057
283,333

4,418,487
2,812,510
283,333

400,327

524,135

552,133

581,531

1,202,455

1,322,644

120,098

157,240

165,640

174,459

360,736

396,793

280,229

366,894

386,493

407,072

841,718

925,851

371,062

457,728

477,326

497,905

1,125,052

1,209,184

371,062
371,062

457,728
457,728

477,326
477,326

497,905
497,905

1,125,052
1,125,052

1,209,184
1,209,184

estment Metrics & Decision Criteria

10.75%
$1,791,087
50.8%
$347,265

BUNDLED/COMBINED

0.0%
$414.2
$406.4
$398.5
$390.5
$382.5
$374.3
$366.1
$357.9

10%

5.0%
$399.5
$391.9
$384.3
$376.5
$368.7
$360.8
$352.8
$344.8

Guest Room Revenue Erosion Rate

10.0%
15.0%
$384.8
$370.1
$377.5
$363.0
$370.0
$355.8
$362.5
$348.5
$354.9
$341.2
$347.3
$333.7
$339.5
$326.2
$331.7
$318.6

20.0%
$355.4
$348.5
$341.6
$334.5
$327.4
$320.2
$312.9
$305.5

25.0%
$340.7
$334.1
$327.3
$320.5
$313.6
$306.6
$299.6
$292.4

5.0% Change of Top

1.0% Change of Left

1.0% Change of Left

$13,199 Change in EAV with 5% Erosion change

$5,351 Change in EAV with 1% Discount Rate Change

5.0% Change of Top

1.0% Change of Left

$20,177 Change in EAV with 5% Erosion change

$12,937 Change in EAV with 1% Discount Rate Change

KARAOKE PUB CAPITAL INVESTMENT ANALYSIS

Equivalent 12YR Investment Term
Beach Karaoke Pub Pro Forma (Self Operate)

Year 0

First Investment
Second Investment

(1,700,000)

887,312

Total Cash Flow

Capital Account Balance
ROI (Annual)

(1,700,000)
1,700,000

887,312
1,700,000
52.2%

ROI (Average)
NPV
IRR
Profitability Index
Discount Rate

Planet Karaoke Pub Pro Forma (Lease)

First Investment
Second Investment
Third Investment
Total Cash Flow
Captial Account Balance
ROI (Annual)
ROI (Average)
NPV
IRR
Profitability Index
Discount Rate

42.8%
4,072,712
52.5%
3.40
10.75%

Year 0

(770,000)

516,250

(770,000)
770,000

516,250
770,000
67.0%

37.4%
1,791,037
55.5%
3.33
10.75%

955,498

999,386

955,498
1,700,000
56.2%

999,386
1,700,000
58.8%

497,770

522,060

497,770
770,000
64.6%

522,060
770,000
67.8%

4
1,045,445

1,045,445
1,700,000
61.5%

5
1,125,052

1,125,052
1,700,000
66.2%

1,209,184
(1,700,000)

887,312

(490,816)
3,400,000
35.6%

887,312
3,400,000
26.1%

547,540
(770,000)

516,250

497,770

522,060

(222,460)
1,540,000
35.6%

516,250
1,540,000
33.5%

497,770
1,540,000
32.3%

522,060
1,540,000
33.9%

955,498

999,386

1,045,445

1,125,052

1,209,184

955,498
3,400,000
28.1%

999,386
3,400,000
29.4%

1,045,445
3,400,000
30.7%

1,125,052
3,400,000
33.1%

1,209,184
3,400,000
35.6%

547,540
(770,000)
(222,460)
2,310,000
23.7%

516,250
516,250
2,310,000
22.3%

10

10

497,770
497,770
2,310,000
21.5%

11

11

522,060
522,060
2,310,000
22.6%

12

12

547,540
547,540
2,310,000
23.7%