Indi and Indrani are sisters who own a software development company. Demand has been increasing for their products and services and the sisters are contemplating whether to open up a satellite office in Austin. They estimate it would add $7 million in expenses with their profit increasing by $2.5 million each year for the next 5 years (all other things equal). Indi and Indrani decidea) to open an new office because the expected marginal benefit ($12.5 million over 5 years) is greater than the estimated marginal cost ($7 million). b) to open an Austin office because the marginal cost of the new office is low compared to other similar projects. c) to not open a new office because the marginal costs prove to be too high.

Answer for the question:

Indi and Indrani are sisters who own a software development company. Demand has been increasing for their products and services and the sisters are contemplating whether to open up a satellite office in Austin. They estimate it would add $7 million in expenses with their profit increasing by $2.5 million each year for the next 5 years (all other things equal). Indi and Indrani decidea) to open an new office because the expected marginal benefit ($12.5 million over 5 years) is greater than the estimated marginal cost ($7 million). b) to open an Austin office because the marginal cost of the new office is low compared to other similar projects. c) to not open a new office because the marginal costs prove to be too high.

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Explanation:

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