Question

The Big Land Acquisition Company (BLAC) has a piece of agricultural machinery that is 10 years old. The machinery is located in Illinois and BLAC intends to sell the machinery in its principal market, which includes the state of Ohio. The machinery has not been utilized for several years and, therefore, BLAC needs to get it reconditioned, which will cost 100,000. The equipment will also need to be transported across the three states at a cost of 10,000. Lastly, BLAC will incur sales commissions of 30,000 in order to sell the asset. BLAC has determined that the exit price for this asset is 400,000 (after reconditioning) based on comparable sales of identical machines in principal markets. What is the total cost that BLAC will incur to sell the machinery?

1) 140,000
2) 140,000,000
3) 140,000,000,000
4) cannot be determined

Answer 1

1) 140,000. The total cost that BLAC will incur to sell the machinery is $140,000.

Step-by-step explanation:

To calculate the total cost that BLAC will incur to sell the machinery, we need to add up the reconditioning cost, transportation cost, and sales commissions. The reconditioning cost is $100,000, the transportation cost is $10,000, and the sales commissions are $30,000. Adding these together gives us a total of $140,000. Therefore, the correct option is 1) $140,000.