Spacely Sprockets is evaluating the construction of a new plant on land the company purchased for...
Spacely Sprockets is evaluating the construction of a new plant on land the company purchased for $2 million last year. The current value of the land is best described as:
A. opportunity cost
B. fixed cost
C. erosion
D. salvage value
E. sunk cost
Homework Answers
A. opportunity cost
The company have the opportunity to sell the land at the current value and make some money. Instead Spacely Sprockets is evaluating the construction of a new plant on land. If spacely decides to build the land, current value is opportunity cost as they have forgone the opportunity to sell the land and make some money.
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