Rob Reiner, a musician by profession, is planning to open a musical instruments store. He estimates that his monthly expenses for operating this store would include $5,000 for wages to the sales and accounts staff, electricity charges worth $1,500, rent of $5,000, and maintenance charges of $400. To start this store, Rob would have to give up his present job as a piano teacher, which pays him $2,000 per month. Additionally, he will also have to borrow $25,000 from the bank to purchase the basic furniture and instruments for the store. Based on the current lending rate, the interest payment on this loan works out to $100 every month. Rob estimates that his monthly economic profit from the sale of musical instruments worth $16,000 will be $4,000.
Which of the following can most reasonably be inferred from the information given above?
A.
The rate of interest charged on loans is 3 percent.
B.
The prices that Rob plans to charge will be higher than what his competition charges.
C.
The expected accounting cost per month is $12,500.
D.
Rob is expecting a 10 percent hike in his pay as a piano teacher.
E.
The explicit costs exceed the implicit costs of opening the store by $10,000.