A local restaurant owner is considering expanding into another rural area. the e

Question

A local restaurant owner is considering expanding into another rural area. the expansion project will be financed through a line of credit with Citibank. the administrative cost of obtaining the line of credit are $500 and interest payments are expected to be 1000 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:
$2,500 per month rent
500 aministrative cost, 1,000 per month in interest payments, $2,500 per month rent
1,000 per month interest payments, 2,500 per month rent
500 administrative cost 2500 per month rent

Explanation / Answer

Answer is : $2500 per month Rent

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