Suppose that Joe had a long term lease which requires him to pay the rent even if he doesn't operate the store. What should Joe do?
Suppose that Joe had a long term lease which requires him to pay the rent even if he doesn't operate the store. What should Joe do?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joe is self-employed in a store that has a rental value of R500 a month which he pays, but he can vacate the building without giving notice. His other expenses are R100 a month for maintenance. He makes R25 000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make R20 000 a year. No one else can be hired to work in the store.
Suppose that Joe had a long term lease which requires him to pay the rent even if he doesn't operate the store. What should Joe do?
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