Answer:
Differential income = $8,100
Explanation:
<em>The differential income is the difference in income between the two alternative uses of the unused space. This would be done as follows:</em>
<em>Option 1</em>
<em>Income from the pop corn option:</em>
$
Sales value 715,000
Less commission (6%×715,000) <u>(42,900)</u>
Net sales value <u>672,100</u>
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Option 2 :
<em>Lease income from Salty Snacks</em>
$
Lease income 188,800
Taxes 47,000
Insurance <u> 9,000</u>
Annual Net lease income <u> 132,800</u>
Total lease income for 5 years 132800× 5= $664,000
Differential income 672,100-664,000 = 8,100
Differential income = $8,100
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