Question $6(1$ point$)$

$$ Saved

Alexa bought a store two years ago for $$250,000.$ She leased it out at $$4,000$ a month. Now she is considering the option to cancel the lease and use the location as a salon. About two months ago, Alexa changed the flooring of the store at a cost of $$20,000.$ She estimates that the machinery for the salon will cost $$150,000.$ Alexa expects the net operating cash flows to be $$35,000$ annually for $5$ years, after which she plans to scrap the remaining inventory and retire. If she opens up this new salon, the sales from her other salon would drop by $10\%.$ Alexa wants a return of $9\%$ on his investment or else she would not go ahead with his plans.

The $$4000$ leasing revenue would be included in the calculation of operating cash flows as it the opportunity cost.

True

False