Indian River Citrus (Financial management)

1. Should the $100,000 that was spent to rehabilitate the affluent treatment be hold in the analysis? Explain. The $100,000 is a monetary value already occurred in the previous(prenominal) and it was decided on a stand-alone basis. The plant would shell out away been rehabilitated regardless of what would kick the bucket with the throw away, just to protect the society?s property. This sunk monetary value should no way be included in the analysis. Of feed in the fact would study been variant if the plant hadn?t been rehabilitated and its replacement was decided straightway for the causes of the project2.Suppose other citrus tree manufacturer had expressed an interest in leasing the lite orange juice production site for $25,000 a yr. If this were true (in fact, it was not), how would that training be incorporated into the analysis?This culture would cause just now a slight convince in the decision-making process. More unique(predicate) we would not propose realizing the plan if the bonny net cyberspace per year (including the cost of capital) leave be less than or bear on to $25,000 which in fact canful also be achieved with no risk at all. In holy order to recommend realizing the project we should either be received that our profit will be higher than our opportunity cost ($25,000), or have no better alternative to throne the company?s capital.

Of chassis the above are reasonable only if in that approve is no cannibalization effect to our sales from the other?s maker?s activities. In this case if we accept his proposal and we re-create this agreement lasts 4 old age and the rent is being paying(a) at the end of severally period we have a NPV of 79,246 , which is greater than the NPV of our project which is 23,720. So assuming equal face of the projects and no other side-effect we would prefer to rent the site. If you want to nonplus a full essay, order it on our website: Ordercustompaper.com

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