Question
A company bought a factory 3 years ago for $ 4.5 million. The factory was intended to produce ventilators, but the project was forgone. The
A company bought a factory 3 years ago for $ 4.5 million. The factory was intended to produce ventilators, but the project was forgone. The company has the choice between either continuing to forgo the project or investing 4 more million dollars and get the production finished. In this case, the company is expecting to sell products for $4.1 million. What should the company do?Select one:a.The company should invest as it has already lost $ 4.5 million as sunk costs, but it is expecting to sell for a marginal benefit of $4.1 million which would compensate the marginal cost of $4 million.b.The company should not invest as it has already lost $ 4.5 million as sunk costs, and $ 0.1 million as marginal benefit, would not compensate for the loss incurred.c.The company should not invest as it has already lost $ 4.5 million as sunk costs, and $4.1 million as marginal benefit, would not compensate for the loss incurred.d.The company should invest as it has already lost $ 8.5 million as sunk costs, but the $0.1 million marginal benefit would be better than nothing.
Select one:a.The company should invest as it has already lost $ 4.5 million as sunk costs, but it is expecting to sell for a marginal benefit of $4.1 million which would compensate the marginal cost of $4 million.b.The company should not invest as it has already lost $ 4.5 million as sunk costs, and $ 0.1 million as marginal benefit, would not compensate for the loss incurred.c.The company should not invest as it has already lost $ 4.5 million as sunk costs, and $4.1 million as marginal benefit, would not compensate for the loss incurred.d.The company should invest as it has already lost $ 8.5 million as sunk costs, but the $0.1 million marginal benefit would be better than nothing.
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The correct answer is c The company should not invest as it has already lost 45 millio...Get Instant Access to Expert-Tailored Solutions
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