50.1k views
5 votes
Bell Brewery paid $1,000,000 for land three years ago. Bell estimates it can sell the land for $1,200,000, net of selling costs. If the land is not sold, Bell plans to develop the land at a cost of $1,500,000. Bell estimates net cash flow from the development in the first year of operations would be $500,000. What is Bell's opportunity cost of the development?

A. $1,500,000
B. $1,000,000
C. $1,200,000
D. $500,000

User Nzc
by
5.5k points

1 Answer

6 votes

Answer:

C. $1,200,000

Step-by-step explanation:

Please see attachment.

Bell Brewery paid $1,000,000 for land three years ago. Bell estimates it can sell-example-1
User Deo Leung
by
6.1k points