Stella's Steak House has been operating for the past 10 years, and Stella has to negotiate her
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Stella's Steak House has been operating for the past 10 years, and Stella has to negotiate her lease on the premises for the next 5 years. Her options are to pay a fixed monthly rent of $2,800 or to pay a variable monthly rent of 8% of her sales revenue.
Over the next 5 years she anticipates her sales to average $525,000 per year.
a. What is Stella's indifference point on an annual sales revenue basis?
b. Which option should she choose? Explain.
Related Book For
Process Dynamics and Control
ISBN: 978-1119385561
4th edition
Authors: Dale E. Seborg, Thomas F. Edgar, Duncan A. Mellichamp, Francis J. Doyle
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