Luke and Liam are brothers who have recently decided to open a restaurant in New York City. They have a cousin who is willing to invest $500k into their business. Although Luke and Liam are amazing general managers and have found an incredible Chef, they need assistance in managing the overall finances of the Company. Based on the following data, determine whether the investment should be structured as a note or as capital. Are some possibilities more profitable than others? Possible initial investment: $500,000 Investor would like a return of approximately 6% a year (either in interest or preferential dividends) Monthly rent in NYC: $5,000 and increases 2% a year Renovation costs to ready the space for restaurant: $45,000 (assume estimated useful life for GAAP is 5 years) Year 2 and year 3: They plan on upgrading kitchen appliances each year with a budget of $30,000 a year (estimated useful lives of 7 years). Leasing options are available Annual revenues from sales are $2M the first year and grow 5% each year. Annual salary and benefit expense (not including Luke and Liam's invested time) $1M Annual cost for food, wine, and beer (to build the cellar), utilities $820k Amounts above are before interest, depreciation, and taxes (Luke & Liam need help estimating) In year 4, the Company is sued by a customer for potential food poisoning. The Company believes it is probable that they will lose the suit and settle on estimated fees of $22,000. Tax Rate is 20% Market interest rate for a small business owner is 7.5%