Chipotle Mexican Grill

[JamesAstrea]

Hi, I am trying to solve the following problem:

• You start with $800k in cash to set up your first Chipotle;
• In year1 and for every subsequent years, your first Chipotle generates $250k in cash;
• You retain that cash every year and reinvest it (as soon as you can) in new Chipotle restaurants;
• Each new restaurant costs $800k to set up and will generate $250k in cash per annum (just like your first Chipotle);
• Maximum number of Chipotles you can set up in your market is 4,000.

Assuming you finance each new restaurant only with the cash generated by existing restaurants, how long will it take for you to saturate your market (i.e. reach 4,000 Chipotles)?

I've been trying to solve this problem but I don't know how to. Any help regarding appropriate formula would be much appreciated.

Thank you

James

 

[stapel]

Hi, I am trying to solve the following problem:

• You start with $800k in cash to set up your first Chipotle;
• In year1 and for every subsequent years, your first Chipotle generates $250k in cash;
• You retain that cash every year and reinvest it (as soon as you can) in new Chipotle restaurants;
• Each new restaurant costs $800k to set up and will generate $250k in cash per annum (just like your first Chipotle);
• Maximum number of Chipotles you can set up in your market is 4,000.

Assuming you finance each new restaurant only with the cash generated by existing restaurants, how long will it take for you to saturate your market (i.e. reach 4,000 Chipotles)?

I've been trying to solve this problem...

Please reply showing your thoughts and efforts so far. When you reply, please include any other information, such as whether the quarter-million "generated" each year is profit or must go toward annual operating expenses. (This information will be crucial to computations.)

Thank you!