7.10 7 B22 HE 100% Requirement 3a: Branch Expansion Analysis The president feels very strongly that Mountain Sports should expand operations to a second location She has even found a prime location in Canmore, Alberta. One of the great things about Canmore is its proximity to the mountains, ski-areas, hiking, biking and only about 10 minutes away from this beautiful vibrant and internationally known Banff tourist town. A choice retail location is presently available at an annual lease rate of $70,000, paid quarterly. The lease expires in five years. Utilities are included in the lease rate. Research indicates that the Canmore market is well suited to both cross-country skis and mountain bikes and that competition is fairly limited. Operation Estimates for Years One through five Initial annual sales projections are $700,000 per year. Cost of Goods Sold is expected to average 35% of sales. Staffing needs are estimated at two full-time individuals plus four, part-time clerks. Full-time salaries will be $2,000 per month per person. Part-time clerks will be paid $12.00 per hour with each clerk putting in an average of 37 1/2 hours per week, 52 weeks a year. 3% sales commissions will be paid. Advertising is budgeted at $800 per month. City property taxes in Canmore are estimated at $5,130 annually, paid quarterly. Investment The owners will initially need $260,000 of equipment to open this new Canmore location. At the end of 5 years the capital assets will have a salvage value of $40,000. The income tax rate is 28% for all years. Should Mountain Sports expand to Canmore