Indian River Citrus (Financial management)

1. Should the $100,000 that was spent to rehabilitate the full treatment be hold in the analysis? Explain. The $100,000 is a represent already occurred in the previous(prenominal) and it was decided on a stand-alone basis. The plant would arrogate away been rehabilitated regardless of what would happen with the project, just to protect the party?s property. This sunk cost should no way be included in the analysis. Of course the vitrine would study been assorted if the plant hadn?t been rehabilitated and its rehabilitation was decided now for the causes of the project2.Suppose another(prenominal) citrus tree producer had expressed an interest in leasing the lite orange juice production site for $25,000 a year. If this were true (in fact, it was not), how would that training be incorporated into the analysis?This study would cause just now a slight convert in the decision-making process. More unique(predicate) we would not propose realizing the plan if the modal(a) net cyberspace per year (including the cost of capital) leave be less than or equal to $25,000 which in fact send away also be achieved with no risk at all. In read to recommend realizing the project we should either be accredited that our profit will be higher than our opportunity cost ($25,000), or have no better alternative to locate the company?s capital.

Of course the above are well-grounded only if in that respect 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 imitate this agreement lasts 4 age and the rent is bein g paid at the end of each period we have a ! NPV of 79,246 , which is greater than the NPV of our project which is 23,720. So assuming equal look of the projects and no other side-effect we would privilege to rent the site. If you want to sustain a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper