Question

The project will require an initial investment of $20,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $14,000, after taxes, if the project is rejected. What should Black Sheep Broadcasting do to take this information into account

Answer 1

Answer and Explanation:

Given that

Initial investment = $20,000

Sale value of the truck = $14,000

Based on the information given, the amount of initial investment should be increased by sale value of the truck i.e $14,000 as it denotes the opportunity cost i.e to be lost not the sunk cost

Therefore, in this case the amount of the initial investment should be increased by $14,000