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Iowa Automotive is considering adding a new auto manufacturer to their inventory of cars that they offer at the dealership. In addition to sales, the new cars will increase cash flows from repairs/service for the dealership by $4,500 per month. In order to finance this expansion, Iowa Automotive plans to take out a loan with monthly payments of $12,000 per month. Which, if any, of these additional cash flows should management consider when evaluating whether to expand their line of cars?

a. only the $12,000 loan payments

b. only the $4,500 repair/service fees

c. both the loan payments and the repair/service fees

d. neither the loan payments nor the repair/service fees.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92054868

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