3372973618d Q Search this course Phoblem 12-1 tannen hdties is can ideing an expan in. The necesary eoioment wodd be purchased for $11 milion, and the expandon mld require an adaknal 0n mestar a what is the initial investment outlay? Round your answer to the nearest dollar. Wite out your answer completely. For example, 13 million should be entored as 1 b. The y sp nt exp $15,000 on research related to h' proiect last year, would this change your answer? why? cost of nsaud is an incremental ash flow should be inch inthe analnis. Yes but anly the tax offect of the research expenses should be indiuded in the analysis. V. No, last year's expendhure should be treated as a terminal cesh flow and dealt with at the and of the project's life. Hence, it should not be included in the initial investment does not represent an incremetal ash Hnebhould not be inchided in the rule v. ti, lat year's expendihre isconsidered as an oooortrity cost that it owns to house the project. Tthe building could be sold for $4 million after taxes and real estate commissions. How would that fact a n that building. Therafore, the possible after-tax sale price and commission must - The company plans to use a building our answ L The potentiadl sale of the building represents an cpportunity cost of conducting the project i charged against the project as a cast building. Therefore, the possible before-tax sale price and tt, The sale of the bulding represents an opportunity cost of conducting the project in that potential sale of the building represents an externality and theratore should not be charged aqainst the project potential sale of the building negresents a real option and therefore should be charged potential sale of the building represents a real option and thersfore s charged against the project as acst It. The against the project should not be charged against the project 8 5