Upland Restaurant Case - Valuing Mutually Exclusive Capital Projects Due: December 8, 2022 by midnight Background: After graduating from Hofstra University 2 years ago, you and three friends decided to start Upland Restaurant. After searching for several months for a location downtown, you decided to go a different route and buy 5 acres of land including an old restaurant and small building, formerly used for offices, at the edge of town. After renovating the old restaurant, you were able to open and grow sales over the past 2 years. However, lacking the initial capital, you never did anything with the other smaller building. Now that you have saved up some cash, you and your friends feel like you can generate some extra income from the existing building. To that end, you and your team have paid $20,000 to a consulting firm for a forecast of the future revenues and costs associated with the different options you are considering. The exhibits given below are the outcome of the consulting firm's research. Your first option is to enter a leasing agreement with a former Hofstra alumnus who runs an event planning company called Diamond Events. After describing the location and space to her, she is interested in renting it out to host a variety of events. In order to make this possible, you will have to renovate the space first, which will take time and money. Additionally, if Diamond Events were to lease the space, you and your team expect there to be an increase in repairs, maintenance, and utilities as well as a slight decrease in restaurant sales from an overall decrease in ambience from the additional event goers (loud partyers, congested parking lot, etc.). Diamond Events is willing to sign a 4-year lease with an annual rent of $84,000 in the first year, growing at 5% thereafter. The team's additional assumptions are given below in Exhibit 1; where the renovation cost is a one-time capital expenditure and the increase in repairs, maintenance, and utilities, is an annual cost. Note: All operating income are taxable, therefore operating expenses reduce the taxable income, while capital expenditures such as renovation costs and equipment costs are not tax deductible