A chain of retail establishments dedicated to the commercialization of jams is studying the convenience of moving one of its stores to the center of the city.

The acquisition price of the new store is $120,000 which includes:

Land $80,000

Building 40,000

The chain must also carry out additional works for an amount of $10,000.

The useful life of the premises is considered to be 25 years, applying the linear amortization system.

Only half of the premises will be used for the store, the rest being leased for $4,000 per year through a 25-year contract.

It is estimated that at the end of this period the land will have a value of $80,000 and that the buildings will have a null residual value.

Currently, the store is located in leased premises, for which an annual rent of $2,000 was paid. This contract covers the same 25 years as the estimated useful life for the new premises, with a clause that will specify that, in the event that the lessee terminates it, he must pay the lessor an indemnity of $1000.

Currently the annual sales figure is $136,000, the acquisition cost of the merchandise is $70,000 per year, and the fixed costs are $4,000, not including rent.

The transfer is expected to increase sales by 50%. Merchandise acquisition costs will also increase by 50%, while fixed costs (not including depreciation) will be $5,000.

Income tax is 50% and the chain expects to finance the move at a cost of 10%.

You are asked to assess the advisability of making the move.