What is opportunity cost and sunk cost of project

Assignment Help Business Economics
Reference no: EM133227564

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

Questions Cloud

What is conversion point for security : What is the conversion point for this security? That is, for what firm values in eight years will the VC convert this claim into equity?
What is cost of using the machine on the project : A company owns a machine that is currently lying unused in the factory. Ignoring the time value of money, what is the cost of using the machine on the project?
Calculate net capital expenditure and working capital : Calculate the net capital expenditure and working capital requirements this would generate if the company's Sales/Net PPE and Working Capita
Production target realistic : What are the key constraints that Tesla faces in trying to achieve this target? Is this production target realistic?
What is opportunity cost and sunk cost of project : Drills to extremely deep depths, and uses the heat of Earth's mantle to create geothermic energy. What is the opportunity cost and sunk cost of the project?
Risk faced by bank due to financial intermediation : Explain the two types of risk faced by bank due to financial intermediation and discuss how banks manage those risks.
Fixed income portfolios on behalf of several clients : William Gross is a fixed income fund manager. He managers fixed income portfolios on behalf of several clients.
Analyze the risk exposure and other considerations : Analyze The risk exposure and other considerations with respect to international real estate for international banks.
Weight of preferred stock and weight of debt : Calculate the following: weight of equity, weight of preferred stock and weight of debt. Calculate the weighted average cost of capital (WACC).

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd