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barxatty [35]
3 years ago
10

A local restaurant owner is considering expanding into another rural area. The expansion project will be financed through a line

of credit with City Bank. The administrative costs of obtaining the line of credit are​ $500, and the interest payments are expected to be​ $1,000 per month. The new restaurant will occupy an existing building that can be rented for​ $2,500 per month. The incremental cash flows for the new restaurant include A. ​$500 administrative​ costs, $1,000 per month interest​ payments, $2,500 per month rent. B. ​$2,500 per month rent. C. ​$500 administrative​ costs, $2,500 per month rent. D. ​$1,000 per month interest​ payments, $2,500 per month rent.
Business
1 answer:
Vladimir79 [104]3 years ago
5 0

Answer:

B) ​$2,500 per month rent.

Explanation:

Incremental cash flows do not include interest payments on investment capital, since the cash flows should be equally generated if you invest your own money, another partner invests his money or someone else lends it to you. The same logic applies to the administrative costs of the credit line.

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Net Worth is equal to assets minus liabilities. Which event will have the greatest impact (positive or negative) on one's net wo
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Why might you choose an investment with high risk instead of one with low risk?
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8 0
2 years ago
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harkovskaia [24]
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3 0
3 years ago
Read 2 more answers
Goods are complements if an increase in the price of one causes a __________ in the demand for the other
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Answer: decreases

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Hence we can conclude that the right answer to the given problem is decrease.

7 0
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