What should the firm do with the warehouse

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Suppose a firm has a warehouse that they originally purchased for $500,000. They have a project that they determine would be acceptable if the costs for the warehouse were at most $1,500,000. The firm has determined the market price for the warehouse is $2,000,000. Should the firm proceed with the project? Why or why not—what should the firm do with the warehouse? Suppose that in the above case the firm originally purchased the warehouse for $2,500,000. Would that change your answer? Would your answer change if the market price was only $1,000,000? Explain how your answer would change.

Reference no: EM131102462

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