Question: You have the opportunity to buy a licence to operate

You have the opportunity to buy a licence to operate a food vending cart in a local park. The licence would cost $1,250 per year. You expect to operate the cart each summer for the next four years, at which time you’ll graduate from university and move on to other things. You aren’t allowed to sell the licence to someone else. You would also have to purchase a cart, which would cost $7,500. You estimate that after four years you would be able to sell the cart for about $1,000. You would have to work 11 hours per day seven days a week from May 15 to September 15.
You estimate that on an average day you would be able to sell $350 of food and drinks and that the cost of the food and drinks you sell, along with condiments and other sup-plies (such as ice, straws, cutlery, cooking fuel) would be $215 per day. In addition, the annual maintenance cost for the cart would be about $900. Should you get into this business? What should you consider beyond the dollar and cents information that was provided? State any assumptions you make.

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  • CreatedFebruary 26, 2015
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