David Owns the Building Out of Which He Operates a Small

question 7

Multiple Choice

David owns the building out of which he operates a small graphic arts business. He has extra space available and is considering converting the extra space into a gourmet coffee shop that
He would also run. A local businesswoman has offered to rent the extra space from him for her
Own needs. She has suggested she would be willing to pay $1,000 a month in rent. In
Estimating the cash flows associated with the gourmet coffee shop, David should

• A)ignore the $1,000 rent since it is a non-issue if David decides to undertake the coffee shop project.
• B)include the $1,000 rent as a cash inflow.
• C)include the $1,000 rent as a cash outflow.
• D)consider the $1,000 as an added benefit.

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Definitions:

Descriptive Techniques

Statistical methods used to describe the basic features of data in a study, providing simple summaries about the sample.

Inferential Techniques

Statistical methods used to make predictions or inferences about a population based on a sample of data from that population.

Population

The entire group of individuals or items of interest from which a sample may be drawn for a study.

Ordinal Data

Data that represent categories with a meaningful order or ranking, but where the intervals between categories are not necessarily equal.