XYZ, Co. has conducted extensive market analysis on a market expansion at the cost of $2 million. If they proceed, they will have to purchase land at $650,000, build a structure costing $4 million, equip the structure at a cost of $161,000, train the staff at a cost of $50,000 and fund working capital of $1 million. New revenues will be about $2.3 million with variable costs at 60% of sales. Which of these costs would be included in the cash flows of time zero and what should be included in the depreciable basis?
XYZ, Co. has conducted extensive market analysis on a market expansion at the cost of $2 million. If they proceed, they will have to purchase land at $650,000, build a structure costing $4 million, equip the structure at a cost of $161,000, train the staff at a cost of $50,000 and fund working capital of $1 million. New revenues will be about $2.3 million with variable costs at 60% of sales. Which of these costs would be included in the cash flows of time zero and what should be included in the depreciable basis?
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
Problem 1PS
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XYZ, Co. has conducted extensive market analysis on a market expansion at the cost of $2 million. If they proceed, they will have to purchase land at $650,000, build a structure costing $4 million, equip the structure at a cost of $161,000, train the staff at a cost of $50,000 and fund working capital of $1 million. New revenues will be about $2.3 million with variable costs at 60% of sales. Which of these costs would be included in the cash flows of time zero and what should be included in the
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