Q3

In capital budgeting, should the following be ignored (1), added (A) or subtracted (S) from the purchase price of OMR 100,000 for a new airport when estimating initial cash outflow? (a) The monthly salaries for the company's administrative employees is OMR 90,700. (b) OMR 3,000 for shipping the airport's lights to the company's facility before operation. (c) The salvage value of the airport will be OMR 20,500 at the end of its useful life. (d) Additional cement needed before the opening of the new airport will cost OMR 7,500. (e) Annual Depreciation for the airport will be OMR 5,000 per year. (f) The tax rate is 30%. (g) Yearly maintenance costs for the airport will be OMR 6,100 per year. (h) Cleaning and painting of OMR 1,500 will be required before operating the airport. For (c) the amount OMR 20,500 should be: Select one: O a. None of the answers are correct O b. Subtracted c. Added d. Ignored