Posted: February 10th, 2021
The corner diner – Jo’s Hash House – has outgrown its small current facility. It serves as many people as it can from breakfast to late night snack, and Jo – the owner – wants to see if she might be able to serve more customers (and make more money) by moving to a new facility. She has three top contenders: a small diner location that is about 25% bigger than her current place; a medium facility that is 50% larger than her current location; and a large facility that is 100% bigger than her current diner. Her nephew, an economics major, has helped her estimate the state of the economy over the next five years, because he feels that the economy will have a big impact on whether or not she will make or lose money in a new diner. If she stays where she is now (“no new facility”), she will make the same amount that she would have no matter what the economy does. The attached table (see below) shows what she and her nephew think will happen to revenues based on the size of the new facility and the economy. For example, if she moves to the new small facility in a robust economy, she expects to make $125,000 more than she would by staying at her current location in that same economy. If the economy is in recession, moving to the medium facility would cost her $100,000 in lost revenues compared to if she had stayed where she was. Complete the table in Excel (xls or xlsx) by filling the highlighted cells with the correct information.
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