A firm will use an existing warehouse for a project. The firm can sell the warehouse today for $3,840,949.00 (after-tax
Posted: Tue Nov 23, 2021 8:49 am
A firm will use an existing warehouse for a project. The firm
can sell the warehouse today for $3,840,949.00 (after-tax cash
flow) IF it rejects this opportunity. The project will last 10.00
years, and the firm thinks the after-tax value of the warehouse
will appreciate by 5.00% per year during that time. Ignoring taxes,
what is the net opportunity cost of this warehouse if the cost of
capital facing the firm is 12.00%?
can sell the warehouse today for $3,840,949.00 (after-tax cash
flow) IF it rejects this opportunity. The project will last 10.00
years, and the firm thinks the after-tax value of the warehouse
will appreciate by 5.00% per year during that time. Ignoring taxes,
what is the net opportunity cost of this warehouse if the cost of
capital facing the firm is 12.00%?