Reference no: EM133433740

Question: A grocery store owner in Vancouver, British Columbia, Mr. Kim has been very successful for over 25 years. Mr. Kim is considering a neglected ice cream store that has been up for sale in Metro Vancouver. Mr. Kim asked for you to review this as a consultant. Mr. Kim provided you with the following information. A replacement ice cream machine is worth $500,000 with expected life is 5 years. new ice cream machine will rejuvenate the store; however, the store will take time to improve its sales. Sales after first year acquisition is 100,000/year with 10% increase year over year. The ice cream at Earnest is at $5/ ice cream. Ice cream price is expected to rise by 3% per year due to inflation. In terms of cost variable cost is expected to be 35% of the price, the cost is expected to increase by inflation as noted above. Mr. Kim will require a new employee to run the store. The salary is minimum wage per hour for 40 hours a week, these are also expected to increase by inflation. Given that the ice cream store will require marketing, digital marketing company has quoted $10,000/ year expected to increase by