Question
Mr. Small purchased a storage comer lot five years ago at a cost of $500,000 and then spent $100,000 on grading and drainage so the
Mr. Small purchased a storage comer lot five years ago at a cost of $500,000 and then spent $100,000 on grading and drainage so the lot could be used. The storage lot was recently appraised at $700,000. The company now wants to build a new retail store on the site. The city requires a payment of $200,000 to convert the use of the lot from storage to a retail store. The building cost is estimated at $2.5 million. What amount should be used as the opportunity costs at time 0 for this building project?
(a) $3,200,000 (b) $3,400,000 (c) $900,000(d) $800.000 e) $700.000 AWayWeGo INC. currently produces boat sails and is considering expanding its operations.
The expansion would require the use of land the firm purchased three years ago at a cost of $142,000 that is currently valued at $137,500. The expansion will use some equipment that is currently sitting idle and requires $6,700 of modifications. The equipment originally cost $139,500 six years ago, has a current book value of $24,700, and a current market value of $39,000. Other capital purchases costing $780,000 will also be required. What should you put as your time 0's cash flow?
(a) $953,400
(b) $963.200
(c) $967,700
(d) $780,000
(e) $183,200
at time 6 for thic tealding prujere? (a) 5) 2000003 (b) 87,200000 (c) sin00000 (4) $800,000 (c) 5700,000 559,000 Oler capital purchases conting 5730.000 will aloo be required. What thould yoa put at yetrat time 01 casb fiow? (a) 5953,400 (b) 5963,200 (c) 5067,700 (d) 570,000 (e) 5183,200Step by Step Solution
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