1. Woolman College expands on-campus student center. Its current facilities are 20,000 square feet and it costs $1,500/month for utilities and $400/month for insurance. Five years ago, they remodeled the existing facility for $30,000. The proposed expansion will increase the size of the facility to 40,000 square feet, include a fully functioning restaurant and will require demolition and renovation of remodeled sections. Management estimates they will need to purchase an additional $25,000 in kitchen equipment. Also, utilities will increase to $3,000 per month and insurance to $1,000 per month. To expand the facilities, Woolman will need to use the $500,000 currently in its investment account, yielding a 10% annual return. 

Find the differential cost of utilities choosing to expand facilities.

Find the Opportunity costs of choosing to expand facilities

Find the  Sunk costs of choosing to expand facilities

Answer rating: 100% (QA)

Differential cost of utilities To find the differential cost of utilities for choosing to expand fac... View the full answer