The first decision Reza is contemplating involves the companys expansion plans. Management is considering opening a Vancouver-based store which would sell directly to customers. Getting the store to opening point next year would cost an estimated $280,000, which can be drawn on the companys line of credit at 5%. However, Reza estimates that the store will generate revenues of $150,000 annually for eight years. He is especially excited about the higher margins realized by selling directly- the manufacturing costs would only add up to 27% of revenues! However, there would also be $40,000 in salary expenses and $3,000 a month in rent. Reza is wondering if Beach Gear should proceed with opening the store, taking into consideration all factors, including those he may not have thought of.

Prepare a business report for Reza. Discuss all relevant issues, including pros and cons of each course of action. Outline any questions/inquiries which should be directed to Reza and why the information is important to certain decisions.