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The project will require an initial investment of $10,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Celestial Crane Cosmetics do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. Increase the amount of the initial investment by $9,000. Increase the NPV of the project by $9,000.

The project will require an initial investment of $10,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Celestial Crane Cosmetics do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. Increase the amount of the initial investment by $9,000. Increase the NPV of the project by $9,000.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The project will require an initial investment of $10,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Celestial Crane Cosmetics do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. Increase the amount of the initial investment by $9,000. Increase the NPV of the project by $9,000.
Transcribed Image Text:The project will require an initial investment of $10,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Celestial Crane Cosmetics do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. Increase the amount of the initial investment by $9,000. Increase the NPV of the project by $9,000.
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