Carni Vore represents a meat sandwich restaurant chain that is expanding into a new, large metropolitan area. He currently has $2 million to invest and wants to open several restaurants. He found that each site will require a cash outlay of $230,000 for leasing, equipment, and initial inventory. Carni is currently looking at 20 sites. The first 15 sites have positive net present values; sites 16 through 20 have negative net present values.
a) What is the maximum number of restaurants that Carni can establish for his company? Explain.
b) How many restaurants can Carni open if his employer increases his budget to $5 million? Explain.