Use the Information for the Question(s)below

question 30

Essay

Use the information for the question(s)below.
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like to lease space in it.Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month.The cash flows from each of the businesses have approximately the same amount of risk.The business names,square footage requirements,and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
-If your new strip mall will have 16,000 square feet of retail space available to be leased,to which businesses should you lease and why?

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Definitions:

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases, but price remains constant.

Inferior Good

A type of good for which demand decreases as the income of individuals or the economy increases, opposite to what is observed with a normal good.

Law of Supply

It states that, all else equal, an increase in the price of a good or service will lead to an increase in the quantity supplied.

Law of Demand

An economic principle stating that the quantity demanded of a good decreases as its price increases, all else being equal, and vice versa.