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2 February, 10:39

The project will require an initial investment of $15,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Yeatman do to take this information into account

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  1. 2 February, 11:06
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    Answer: Increase the Amount of the Initial Investment by $9,000

    Explanation:

    It is important to note that when estimating the costs of a project that Opportunity Costs are included because they are costs afterall.

    Opportunity Costs are the benefits you would have accrued had you taken the alternative to your current action.

    If the project was not embarked on, the truck could have been sold for $9,000 making that $9,000 an Opportunity cost.

    To give a fair reflection of the project costs therefore, Yeatman should increase the Initial investment by $9,000.
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