Question
You are considering opening a restaurant in the District of Columbia that specializes in Canadian cuisine. You know of a building that you could buy
You are considering opening a restaurant in the District of Columbia that specializes in Canadian cuisine. You know of a building that you could buy that would cost $100,000. It would require $30,000 in improvements, however, to make it usable. Some of the improvements would be useful only to a restaurant selling Canadian cuisine. You have already paid $5,000 for market research that indicates a strong demand for Canadian cuisine.
You have also already paid a consultant $10,000 to help with a cost analysis. The cost and demand research Indicate that you could more than cover expenses for one year, but the Canadian cuisine craze will then die out and you will have to sell the building. Since there are no other entrepreneurs with the skills to run Canadian- cuisine restaurants, the building can be sold for $123,000 maximum, even after the improvements. You would also have to pay a real estate agent $10,000 in order to sell the building. What is the minimum total profit that you would have to earn in one year of business to justify proceeding with the restaurant?
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