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Problem 3 Sarena Wilkes, owner of the San Jose Caf, is negotiating with the lessor regarding the lease of the building for the next
Problem 3 Sarena Wilkes, owner of the San Jose Caf, is negotiating with the lessor regarding the lease of the building for the next five years. The lessor has proposed the following lease payment alternatives. 1. Monthly fixed lease payment of $2,000. 2. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 3. Monthly variable lease payment of 6 percent of net sales. Required: 1. What is the indifference point among the three proposals? 2. If expected average annual net sales are $350,000, which lease payment alternative should be recommended to Sarena Wilkes? 3. If expected average annual net sales are $500,000, which lease payment alternative should be recommended to Sarena Wilkes? way bloow W
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