Question Description
In the spring of 2020, your friend inherited a commercial real estate property in the Madison Park area of Seattle.This property is located in the heart of an expensive residential area on the west side of Lake Washington.Currently the property has a 3,000 square foot one story building that contains a convenience store (a small grocery store).Your friend now owns and operates the store which is only moderately profitable.She is considering changing how this property is being utilized.Her strategy is to close the convenient store, and renovate the building in order to open up a coffee shop that also serves light healthy lunches and dinners.She has come to you for advice and is hoping you would analyze this decision and provide a recommendation on whether she should close the convenience store and renovate the building in order to open up the coffee shop.Assume a start date (time 0) as the end of 2020 (12/31/2020). Additionally, your friend has stated that she is planning on living in this area for another 10 years and is likely to sell the property at that time.Assume the sale price in 10 years will be the same regardless of the decision to renovate or not.
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