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 33.) For LLS, the $10,000 fee is a: Question 33 options: Incremental cash flow Externality Sunk cost Opportunity 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
33.)
For LLS, the $10,000 fee is a:
Question 33 options:
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Incremental cash flow |
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Externality |
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Sunk cost |
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