MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 5, Problem 17PAA
A local restaurateur who had been running a profitable business for many years recently purchased a three-way liquor license. This license gives the owner the legal right to sell beer. wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000 since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dinner customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. What is your opinion of the restaurateur’s decisions? Would you recommend that she accept the $77,000 offer?
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A local restaurateur who had been running a profitable business for many years, recently purchased a three-way liquor license. This on-premise license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dining customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000.
a) Would you recommend that she accept the $77,000 offer?
b) The restaurateur…
A local restaurateur who had been running a profitable business for many years recently purchased a three-way liquor license. This license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dinner customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. What is your opinion of the restaurateur’s decisions? Would you recommend that she accept…
A local restaurateur who had been running a profitable business for many years recently purchased a three-way liquor
license. This license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the
three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is
transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for
about one year, the restaurateur came to the realization that she was losing dinner customers and that her profitable
restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in
various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait,
she finally received one offer to purchase her license for $77,000.
Was it sensible for the restaurateur to spend $8,000 in order to sell the license for…
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MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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