Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs. LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service. Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not. Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service. You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year 34.) The $20,000 per year benefit that would accrue to the existing lawn maintenance service only if the new lawn care service is implemented is best described as a: Question 34 options: Incremental cash flow2 Externality Opportunity cost Sunk cost
Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs. LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service. Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not. Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service. You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year
34.)
The $20,000 per year benefit that would accrue to the existing lawn maintenance service only if the new lawn care service is implemented is best described as a:
Question 34 options:
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Incremental cash flow2 |
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Externality |
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Sunk cost |
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