Bargin Pharmaceuticals,owns a manufacturing facility that is currently sitting i

Question

Bargin Pharmaceuticals,owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $267,000. The facility itself cost $1,460,000 to build. As of now, the book value of the land and the facility are $267,000 and $617,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,619,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm was to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis?

$0

$617,000

$887,000

$1,619,000

$0

$617,000

$887,000

$1,619,000

Explanation / Answer

Hi,

Please find the answer as follows:

Option D (1619000) should be included in the project analysis.

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.