Question

Roger recently purchased a restaurant, including the building, fixtures and inventory. At the time of the purchase, the market value of the restaurant was equal to its book value. The fact now that the current market value of the restaurant being lower than its current book value is due to _______________.

Multiple Choice

the improvements to the surrounding area by other store owners

the addition of a stop light at the main entrance to the restaurant's parking lot

the replacement of old inventory items with more desirable products

the construction of a new restricted access highway located between

the restaurant and the surrounding residential areas a sudden and unexpected increase in inflation

Answer 1

The correct answer is:

the construction of a new restricted access highway located between the restaurant and the surrounding residential areas.

This reduced access to the restaurant has a direct impact on the revenue of the restaurant, which causes the market value to go down.

All the other answer options have a positive or no impact on the revenue of the restaurant. If there is a sudden and unexpected increase in inflation the restaurant can increase the prices so that it doesn't lose much in revenue.