Your firm is preparing to open a new retail strip mall and youhave multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent each month plus apercentage of the gross sales generated each month. The cashflows from each of the businesses have approximately the sameamount of risk. The business names, square footagerequirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall areprovided below. If your new strip mall will have 15,000 square feetof retail space available to be leased, to which businesses shouldyou lease and why?
|
Business Name
|
Square Feet Required
|
Expected Monthly Cash Flow
|
|
Videos Now
|
4,000
|
70,000
|
|
Gords Gym
|
3,500
|
52,500
|
|
Pizza Warehouse
|
2,500
|
52,500
|
|
Super Clips
|
1,500
|
25,500
|
|
30 1/2 Flavors
|
1,500
|
28,500
|
|
S-Mart
|
12,000
|
180,000
|
|
WalVerde Drugs
|
6,000
|
147,000
|
|
Multigular Wireless
|
1,000
|
22,250
|