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Find the amount of revenue from franchise fees

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Reference no: EM131811951

Question - Watts Inc. charges an initial franchise fee of $690,000, with $150,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is $409,404. The franchisee has the option to purchase $90,000 of equipment for $72,000. Watts has substantially provided all initial services required and collectability of the payments is reasonably assured. The amount of revenue from franchise fees is

a. $150,000.

b. $541,404.

c. $559,404.

d. $690,000.

Reference no: EM131811951

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