Your firm is preparing to open a new retail strip mall and you have multiple businesses that
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Question:
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like to lease space in it. Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month. the cash flows from each of the businesses have approximately the same amount of risk. the business names, square footage requirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
Business Name | Square Feet Required | Expected Monthly Cash Flow |
Videos Now | 5000 | 70000 |
Gords Gym | 35000 | 52500 |
Pizza Warehouse | 25000 | 52500 |
Super Clips | 15000 | 25500 |
30 1/2 Flavors | 15000 | 28500 |
s-Mart | 12000 | 180000 |
WalVerde Drugs | 6000 | 147000 |
Multigular Wireless | 1000 | 22250 |
If your new strip mall will have 15, 000 square feet or retail space available to be lease, to which business should you lease and why?
Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
Posted Date: