Iowa Automotive is considering adding a new auto manufacturer to their inventory of cars t
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