Question
6. The restaurant owner is planning to expand his business with a license to a terrace on the street with ten tables. For this, he
6. The restaurant owner is planning to expand his business with a license to a terrace on the street with ten tables. For this, he has already hired a consultant, whom he must pay 340, to make sure he is informed of all the steps needed to be undertaken in the town hall to get the operating license for the next 5 years. The furniture would cost 4,000 and it would be necessary to hire a bartender to serve the terrace with an annual gross salary, including costs of social security and insurance, of 18,000 and an additional cook with a gross annual salary of 20,000. Each of the tables that the restaurant already has generates a monthly net income of 600, but the terrace tables are expected to generate 25% less since they cannot be used in bad weather. If the annual license for each table costs 1,000 and the cost of capital for the business is 12%, should the owner set up the terrace?
a) Yes, since the NPV is 17,628.65
b) Yes, since the NPV is 20,987.55
c) No, since the NPV is 3,457.23
d) None of the above
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