Question

the project will require an initial investment of $15,000, but the project will also be using a company-owned truck that is not currently being used. this truck could be sold for $12,000, after taxes, if the project is rejected. what should garida do to take this information into account?

Answer 1

Garida should consider the $12,000 from the potential sale of the truck as an opportunity cost and add it to the initial investment amount required for the project.

Step-by-step explanation:

When considering whether to proceed with a project that requires an initial investment of $15,000, Garida must also account for the opportunity cost of using a company-owned truck. The truck, which has a value of $12,000 if sold after taxes, represents an alternative use of the asset that must be factored into the project's cost.

Therefore, Garida should add the $12,000 to the project's initial investment amount to accurately assess the total cost, as this is a foregone benefit that the company will not realize if the project moves ahead using the truck.