What is opportunity cost and sunk cost of project

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Your company, Vulcan Enterprises Inc., is considering starting a division that drills to extremely deep depths, and uses the heat of Earth's mantle to create geothermic energy. Vulcan Enterprises has spent $80,000,000 on R&D, and believes that the new geothermal plants it can produce will create electricity at half the cost of other technologies, is the safest alternative, and does not heat the atmosphere. The R&D cannot be sold because it is specific to Vulcan Enterprises. A large plant that Vulcan Enterprises owns would be used by the project. The plant could otherwise be sold today for $128,000,000 net of taxes. Your company's debt ratio will be 56%. The marginal corporate tax rate is 21%.

What is the opportunity cost and sunk cost of the project?

Reference no: EM133227564

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