Mara has 2 carretas for selling her products in shopping centers (One carreta per location: Plaza Carolina,
Question:
Mara has 2 "carretas" for selling her products in shopping centers (One "carreta" per location: Plaza Carolina, Plaza del Sol). Each location sells annually $276,000 (Total Sales Revenues $552000 = 276000 * 2) with a 40% Gross Margin. Annually each location has salaries and related expenses of $53,000. Annual expenses for Rent and all other expenses are $55,000 for each location.
To improve sales and profits, Maria is considering the strategy of adding a "carreta" in Plaza Las Amricas (PLA) where she expects to sell per year $336000. In PLA annual salaries and related expenses would also be $53,000, but rent and other costs would be $67000. The initial investment to start in PLA would be $25,000 (for inventory and some rent prepayments). Required Return is 20%.
What is the strategy Net Present Value (adding Plaza Las Amricas)?