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Question
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 includeA) $500 administrative costs, $1,000 per month interest payments, $2,500 per month rent.
B) $500 administrative costs, $2,500 per month rent.
C) $1,000 per month interest payments, $2,500 per month rent.
D) $2,500 per month rent.
Answer
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