Question
Mara has 2 carretas for selling her products in shopping centers (One carreta per location: Plaza Carolina, Plaza del Sol). Each location sells annually $245,000
Mara has 2 "carretas" for selling her products in shopping centers (One "carreta" per location: Plaza Carolina, Plaza del Sol). Each location sells annually $245,000 (Total Sales Revenues $490000 = 245000 * 2) with a 40% Gross Margin. Annually each location has salaries and related expenses of $48,000. Annual expenses for Rent and all other expenses are $54,000 for each location.
To improve sales and profits, Maria is considering the strategy of adding a "carreta" in Plaza Las Amricas (PLA) where she expects to sell per year $305000. In PLA annual salaries and related expenses would also be $48,000, but rent and other costs would be $66000. The initial investment to start in PLA would be $25,000 (for inventory and some rent prepayments). Required Return is 20%.
What is the strategy Net Present Value (adding Plaza Las Amricas)?
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