328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, 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. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. 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? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month

328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, 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. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. 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? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter20: Hybrid Financing: Preferred Stock, Leasing, Warrants, And Convertibles

Section: Chapter Questions

Problem 13IC: FISH CHIPS INC, PART I LEASE ANALYSIS Martha Millon, financial manager for Fish it Chips Inc., has...

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