Melissa Is a Massage Therapist at a Well-Known Spa

Melissa is a massage therapist at a well-known spa. As such, Melissa must provide
her own oils and lotions, hot stones, and music. Melissa purchased the hot stones and
music she required when she first began her career, about a year ago. The oils and
lotions run her about $300 a month. She generates revenues of about $3,000 a month,
but the spa takes 50% of the fees she collects in return for providing the facility,
massage table, linen service, and support (e.g., receptionist and scheduler.)Melissa is
considering opening her own business now that she has built up a sufficient clientele.
She has found a place she can rent for $1,000 a month. This includes utilities. She has
estimated that a massage table would cost her $600. Linens will cost another $1,000,
but she figures she'll launder them herself and, thus, avoid the cost of a linen service.
She'll also handle her own bookings. Calculate the amount by which Melissa's net
monthly financial cash flows would increase or decrease if she sets up her own shop.
What other information would you require to estimate the costs and benefits of her
decision more accurately?