Considering a lease for new bean storage

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A coffee shop operates 28 days each month. They use 200 pounds of beans each month to make their coffee, and each pound of beans costs $3.00. It costs $7 to place an order. Costs to hold the beans in storage is estimated to be 20% of the cost of the beans each month.

To reduce spoilage, the coffee shop is considering a lease for new bean storage. It would cost $150 per month to lease the storage. Holding costs would decrease from 30% of the price of beans to 22%. What steps would you take to evaluate this lease?

Reference no: EM13841123

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