Would you recommend building the warehouse

Reference no: EM131959656

Question: Your company wants to build a new warehouse on land originally bought for a plant your company did not build. The land's original cost was 1,000,000. It's worth today is 500,000. Construction would be another 1,000,000. Depreciation would be over 20 years with a scrap value of -10,000. Sales would increase by 800,000 per year and SG&A would increase by 50,000 per year. Your cost of capital is 8%. Would you recommend building the warehouse?

Reference no: EM131959656

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