A firm will use an existing warehouse for a project. The firm can sell the warehouse...
A firm will use an existing warehouse for a project. The firm can sell the warehouse today for $3,511,244.00 (after-tax cash flow) IF it rejects this opportunity. The project will last 10.00 years, and the firm thinks the after-tax value of the warehouse will appreciate by 5.00% per year during that time. Ignoring taxes, what is the net opportunity cost of this warehouse if the cost of capital facing the firm is 12.00%?
Homework Answers
Please find below the solution.. let me know if you need any clarification..
Opportunity cost which firm should consider for the warehouse is = $3,511,244.00
Because this is the price firm will get today after tax if they sold this warehouse. Therefore answer = $3,511,244.00
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