Question
A. While scouting out neighborhood locations you realize that creating this restaurant will be riskier than you thought. If you bring in one partner you
A. While scouting out neighborhood locations you realize that creating this restaurant will be riskier than you thought. If you bring in one partner you will share the profits evenly, but your risk is cut in half. You estimate the restaurant will bring in $1000 a week in profits. Restaurant concepts like "hot rocks" last 5 years before people stop coming. Right now the prime interest rate is 8%. Calculate the price of a potential partner should pay for a half a share of the business (assume all profits come in at once at the year's end to keep things simple.
B. A friend offers you $99,000 for a half of the business. Should you take their offer (Yes/No) Explain why.
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