Square footage requirements and effective utilization.
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like 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
|
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
|
Show calculations
a) If you're new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
b) If you're new strip mall will have 16,000 square feet of retail space available to be leased, to which businesses should you lease and why?