Francesca would like to lease a coffee cart in Whistler, B.C.
The lease is $800 per month, and a city licence to sell food and
beverages costs $20 per month. The lessor of the stand has shown
Francesca records indicating that gross revenues average $32 per
hour. The out-of-pocket costs for ingredients are generally about
40% of gross revenues. Last year she paid 25% of her income in
taxes.
Francesca pays $1,000 per month for her condominium. She could
store the cart overnight in the condo’s garage, which is currently
unused. Real estate developers in Whistler estimate that about 20%
of the cost of a residential building is for the garage.
At present, Francesca is earning $2,400 per month as a ski
instructor for one of the big ski areas. In the summertime, she
earns about the same income by working as a kayaking
instructor.
1. For each piece of quantitative information in this problem, indicate whether it is relevant to Francesca’s decision.
Quantitative information | ||||
---|---|---|---|---|
1. | Cart lease $800 per month: |
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2. | City license $20 per month: |
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||
3. | Ingredients 40% of revenue: | Relevant or Irrelevant | ||
4. | Last year’s income tax rate of 25%: |
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||
5. | Condo rent of $1,000 per month and 20% of condo cost for garage: |
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||
6. | Current income $2,400 per month: |
|
2.
If Pearl leases the cart and works 30 days in a month, how many
hours will she have to work
|
|
each day, on average, to be at least as well off financially as she is in her current job? |
3.
If Pearl wants to work only 25 days per month, how much will revenues have to increase PER HOUR for her to work 4 hours per day and be as finically well off as she is in her current job? |
Francesca would like to lease a coffee cart in Whistler, B.C. The lease is $800 per...
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