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How should the fees paid to the consultant be treated

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Reference no: EM132771893

Problem 1: A company is considering the purchase of new manufacturing equipment in order to meet increased demand for one of its products. The firm paid a consultant $50,000 to assist in the estimation of all project operating revenues, operating expenses, depreciation expenses, taxes, and NOWC estimates. In the estimation of incremental cash flows for this project, how should the fees paid to the consultant be treated?

Select one:

a. treated as a tax-deductible cash outflow spread evenly over the life of the project
b. included as an opportunity cost (cash outflow) at time 0 for the project
c. ignored as a sunk cost
d. none of the above

Reference no: EM132771893

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