Question
Imagine that there is Project A, which is housed in a factory. If the company does Project A, then it cannot sell the factory right
Imagine that there is Project A, which is housed in a factory. If the company does Project A, then it cannot sell the factory right now in which Project A is housed. If the company does not do Project A, then the factory is immediately sold for $20M. Selling the factory ($20M) is thus the opportunity cost of doing Project A.
When you are calculating the cash flow of Project A, should you include the $20M in your cash flow analysis, and NPVs?
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
