2. Marie Hartwell is comparing two sites for her clothing boutique, which she has decided to relocate from a tiny strip mall that has had declining business over the past 2 years.

Marie’s casual clothing generally appeals to younger customers, and both sites will be more visible to these customers. One site is located downtown, near the campus of a prestigious prep school. The other site is in a popular indoor shopping mall.

Both sites have high traffic counts, which Marie believes will be an important factor to her boutique’s success. She estimates that the average number of customers each day will be about 0.33 percent of the daily traffic count and that the value of the average sale per customer will be about $30, which is the median price of her clothes.

The average cost of the clothing she sells is 50 percent of the retail price. Marie needs to do some renovation at each site, and she will be paying monthly rent at each. Her shop will be open 306 days per year. Compare the annual before-tax profit for the two sites.

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FACTOR DOWNTOWN Site Location MALL Average business day traffic 16,500 18,300 Site preparation $22,000 $25,000 Monthly operating costs (rent, insurance, staffing, etc.) $11,000 $12,000