A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $30,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it. How would you treat the cost of the ship for the purposes of the NPV analysis for the new training course?
A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $30,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it. How would you treat the cost of the ship for the purposes of the NPV analysis for the new training course?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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7.4 q2
A scuba diving school has been given the opportunity to purchase a sunken shipwreck for just $30,000, giving trainee scuba divers the opportunity to navigate through the ship as part of their training. They are now considering a project to set up a new training course built around access to the ship. If the course is unlikely to be profitable, the sunken ship can be sold to another scuba diving school that is interested in acquiring it.
How would you treat the cost of the ship for the purposes of the
a.
There is an opportunity cost to the value of $30,000.
b.
There is a sunk cost to the value of $30,000.
c.
There is a positive externality to the value of $30,000.
d.
There is a negative externality to the value of $30,000.
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