Remodelling Decision}

Ferinni Company operates a travel agency out of a historic building in Smalltown. Ferinni's CEO believes that the building needs to be remodelled in order to reach a wider customer base. The CEO proposes building a new entry that would be adjacent to Main Street in order to attract more foot traffic. The current entry faces a parking deck at the rear of the building and is easily overlooked by customers. The new entry will require the rearrangement of several offices inside the building. Because of competition from Internet travel sites, Ferinni will not be able to raise rates for its travel service after the remodelling is made.

\section*{Required:}
1. Identify the factors that Ferinni should consider when evaluating whether to remodel the building.
2. CONCEPTUAL CONNECTION Since the revenue rate cannot be increased, can the cost of the remodelling be capitalized? Why or why not?
\section*{Problem