Nissan Motors is thinking about setting up a new manufacturing plant in Farmvill

Question

Nissan Motors is thinking about setting up a new manufacturing plant in Farmville, NC to manufacture a special edition SUV which will be for sale only in the US. The company bought land in the area a few months ago, currently valued at $3million, in anticipation of setting up the plant. They also conducted a nationwide survey to determine which line of SUVs would do well in the US market. The survey cost the company $4million. If they go ahead with the project they will have to spend $150mil outfitting the plant with equipment. The equipment will be depreciated straight-line over the 5 year life of the project to its estimated scrap value of $3,000,000. Based on the response to the survey, the firm

Explanation / Answer

-408,000,000

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