A "pop-up" store wants to use vacated space at a shopping centre to sell seasonal merchandise during the months of October,November and December.The rent is $10,000 per month,but the centre's owners are requiring a payment of $100,000 on September 1.If the space is vacated in good condition at the end of December,the owners will return $70,000 to the lessees.How should the $100,000 be financed?

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Quizplus · Accepted Answer

Since the pop-up store will only be using the space temporarily for three months, it would be more beneficial to finance it with short-term loans instead of equity or long-term debt. Using trade credit may not be feasible in this situation since the payment of $100,000 is due upfront, so short-term loans would be a better option.

A "Pop-Up" Store Wants to Use Vacated Space at a Shopping