The ABC Coffee Shop

ABC. Cotter is a popular local coffee shop in a suburhan neightorhnod. With increasing demand and positive feedback from customers, the awners are contemplating expanding their operations hy opening a second Ioration in a hearty commercial district However, they are urisure about the financial feasibility of this expansion and whether the rew location will generate enough revenuc to cover its costs

ABC Coffer will have to buy equipment worth $$36,000$ for the new lucation which they will have to finance through a business ioan.

The following are the costs associated with running the new location:

rent for the new iocation: $$4000$ per month.

Utilities: $$800$ per month

Salaries for additicnal staft: $$3000$ per manth

Marketing and promotional expenses: $$1500$ per month for the first three months and $$200$ for the following manths

Cost af coffee beans; $$0\mathrm{.}50$ per cup

Cost of milk, sugar, and other ingredients $$0\mathrm{.}30$ per cup

Disposable cups and lids $$0.15$ per cup

They plan to sell each cup of coffee for $$350.$

The promational costs are intrially large at $51500$ pp: month as stated above but they wifi nech have to do this for three manths after which the costs will devedse to $$200$ per muth. How will the dreak$-$even quantity change after $3$ months? they realize with that level of business during the next $3$ y ars? after $3$ years?

The owners of Asc Colfee think that if they lower their price to $$2\mathrm{.}50$ per nup of coffee, they will be able to increase their demand to $9000$ cups of coffee per month. It this is the case, what will the munthiy profit be$?$