. Alternative Uses. The Edo Building Company owns an office building in the business center of Tokyo. The building has a large unused lobby area. The facilities manager for the firm, Yuri Misatuni, is planning to get a greater financial return from the unused space and believes that a convenience shop should be placed in the lobby. She talked to managers of several other office buildings and projected the following annual operating results if the company establishes the shop:

The investment required would be \(¥ 5,000,000\), all for equipment that would be worthless in ten years. Before presenting the plan to the executive manager, Yuri learned that the space could be leased to an outside firm that would operate a convenience shop. The lease firm would pay a commission of \(¥ 500,000\) per year for ten years. Because the lobby is heated and lighted anyway, Edo would supply utilities at a minimal added cost. Edo's cost of capital is 12 percent. Ignore taxes.
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1. Determine the best course of action for Edo Building Company.
2. Determine how much annual rent Edo would have to receive to equalize the attractiveness of her options.

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Sales..... Cost of sales... Salaries and benefits of clerks Licenses and permits....... Share of utilities on the building Share of building depreciation.. Advertising for the shop.... Allocation of Edo administrative expense 8,500,000 4,000,000 2,400,000 100,000 200,000 100,000 100,000 150,000