Indian River Citrus (Financial management)

1. Should the $100,000 that was spent to rehabilitate the full treatment be allow in the analysis? Explain. The $100,000 is a woo already occurred in the previous(prenominal) and it was decided on a stand-alone basis. The plant would win away been rehabilitated regardless of what would happen with the project, just to protect the friendship?s property. This sunk cost should no way be included in the analysis. Of course the cheek would study been antithetical if the plant hadn?t been rehabilitated and its rehabilitation was decided now for the causes of the project2.Suppose some other citrus tree producer had expressed an interest in leasing the lite orange juice production site for $25,000 a year. If this were true (in fact, it was not), how would that training be incorporated into the analysis?This selective information would cause just now a slight budge in the decision-making process. More unique(predicate) we would not propose realizing the plan if the median (a) net cyberspace per year (including the cost of capital) leave be less than or equal to $25,000 which in fact jackpot also be achieved with no risk at all. In golf-club to recommend realizing the project we should either be certain(a) that our profit will be higher than our opportunity cost ($25,000), or have no better alternative to fit out the company?s capital.

Of course the above are logical only if in that respect is no cannibalization effect to our sales from the other?s producer?s activities. In this case if we accept his proposal and we imitate this agreement lasts 4 eld and the rent is being paid at the end of from each one period we have a NPV of 79,246 , which is greater than the NPV of our project which i! s 23,720. So assuming equal look of the projects and no other side-effect we would pick to rent the site. If you want to sustain a full essay, order it on our website: OrderEssay.net

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