Question
A 1,000 sq. ft. start-up coffee shop operator in an office building expects sales of $100,000 per year for each of the next 3 years.
A 1,000 sq. ft. start-up coffee shop operator in an office building expects sales of $100,000 per year for each of the next 3 years. Given the following choices, which 3-year lease would the coffee shop prefer?
a. Base rent of $14.30 /sq. ft. and percentage rent of 5% over a breakpoint of $70,000
b. Base rent of $15.00 /sq. ft. and percentage rent of 4% over a breakpoint of $80,000
c. Base rent of $13.40 /sq. f.t and percentage rent of 6% over a breakpoint of $60,000
d. All the choices are equivalent
e. Base rent of $12.30 /sq. ft. and percentage rent of 7% over a breakpoint of $50,000
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