Question
A local restaurant owner is considering an expansion into a new urban area. Two months ago, the owner paid a consulting firm $8,000 to analyze
A local restaurant owner is considering an expansion into a new urban area. Two months ago, the owner paid a consulting firm $8,000 to analyze the area to see whether it was a potentially good area in which to expand. Once she decided to go ahead with the investment, the owner secured a line of credit with First National Bank to finance the project. The interest payments on the line of credit 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 relevant incremental cash flows for the new restaurant include: A.$8,000 B.$2,500 C.$1,000 and $2,500 or D.$ 8,000, $1,000, and $2,500???
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