question archive A company is considering building a distribution center on undeveloped land that it acquired more than ten years ago at a cost of $400,000
A company is considering building a distribution center on undeveloped land that it acquired more than ten years ago at a cost of $400,000
Subject:FinancePrice:2.86 Bought11
A company is considering building a distribution center on undeveloped land that it acquired more than ten years ago at a cost of $400,000. The company estimates the cost of putting in utilities, sewers, roads and other such costs of preparing the land for the distribution center at $200,000. Three months ago the company also spent $20,000 to conduct a land appraisal which found the market value of the land is now $600,000. In evaluating this capital project, the initial investment outlay associated with the use of the land by the distribution center will most likely be considered to be: The amount is $800,000. The amount is $820,000. The amount is $1,200,000. The amount is $620,000.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer: Option (B) - $820,000
The initial outlay = Land's today's price + Cost of preparation + Market research cost
= $600,000 + $200,000 + $20,000
= $820,000
Hence, option (B) is correct
