What should be the opportunity cost of funds in valuing the cash flows from the ownership of a McDonald’s franchise?

The opportunity cost of funds in valuing the cash flows from ownership of a McDonald’s franchise should be the rate of return that could be earned on an alternative investment providing similar risks and returns. For example, if the investor is thinking about investing $1 million in a McDonald’s franchise, they want to know what kind of return their money would generate over time.

In this case, it would make sense for them to compare the expected return of owning a McDonald’s franchise with other investments with similar risk profiles such as bonds or mutual funds. By comparing the returns investors will be able to estimate how much they will make from their investment. This also allows them to factor in any additional costs such as employee wages and insurance premiums. These numbers will allow investors to determine the amount of profit that is needed before taxes are deducted so they can add value over time.

Additionally, when considering the opportunity cost of funds for evaluating cash flows related to owning a McDonald’s franchise investors should take into consideration external factors such as inflation rates which might affect future returns generated by venture depending upon current macroeconomic climate existing at any given period. These factors are crucial in assessing potential income streams that a business can generate from its ownership. They also help to determine whether it is worth investing money over the long-term.