Question

There are 2 options. Option 1 is to rent out a spacious warehouse nearby. If they pursue this option, their rent

will be $1200 per month and utilities are estimated to cost an additional $350 per month. Their 2nd option, option 2 is to rent a smaller storefront space that is also nearby. The storefront rent is $1350 per month. However, utilities will likely only cost an additional $150 per month. They want to compare their options over one year’s time. What is the incremental analysis if the they decide option 1 over option 2?

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