Chapter 7 Practice

You are planning to open a local restaurant, and can either rent or buy the facility. If you rent the facility, you will pay $2,500 per month in rent plus approximately $1,300 in utilities per month. You will also be required to purchase renters' insurance, which will cost you $350 per month. All maintenance fees on the building and landscaping, however, will be provided by the property owner. If you buy the facility, your mortgage will be $1,800 per month, and utilities will be $1,300 per month. Your property insurance will be $600 per month and your expected maintenance costs are $1,000 per month. What is the incremental cost of purchasing the building?

Select answer from the options below

A. -$450

B. $1850

C. $550

D. $250

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