1. Should the $100,000 that was spent to rehabilitate the ample treatment be allow in in the analysis? Explain. The $100,000 is a speak to already occurred in the previous(prenominal) and it was decided on a stand-alone basis. The plant would take away away been rehabilitated regardless of what would choke with the picture, just to protect the phoner?s property. This sunk represent should no way be included in the analysis. Of cart track the good example would study been diverse if the plant hadn?t been rehabilitated and its reclamation was decided instanter for the causes of the project2.Suppose another(prenominal) citrus tree manufacturer had expressed an interest in leasing the lite orange succus production site for $25,000 a pipeline. If this were true (in fact, it was not), how would that training be incorporated into the analysis?This selective information would cause just now a slight potpourri in the decision-making process. More unique(predicate) we would not propose realizing the plan if the fairish net cyberspace per year (including the cost of capital) leave be less than or friction match to $25,000 which in fact stinker also be achieved with no risk at all. In coiffe to recommend realizing the project we should either be authentic that our profit will be higher than our opportunity cost ($25,000), or have no better alternative to sit the company?s capital.
Of course the above are logical only if in that compliments is no cannibalization effect to our gross sales from the other?s producer?s activities. In this case if we accept his proposal and we pursue this agreement lasts 4 old age and the rent is being paying at the end of from each one period we have a NPV of 79,246 , which is greater than the NPV of our project which is 23,720. So assuming equal odour of the projects and no other side-effect we would select to rent the site. If you want to carry a full essay, order it on our website:
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