Homework Help: Microeconomics

Posted by Jamie on Wednesday, January 23, 2008 at 9:53pm.

A corporation began construction on a new site 2 years ago. At that time mgrs predicted the new plant would generate over $5 million in sales, however, now a more conservative estimate shows that the new plant will only generate an additional $3 million in sales. Over the past two years the corp. has spendt $4 million on construction of the new site. Another $2 million is needed to complete the facility. Should the mgrs scrap the project or move forward. Explain your answer....Instructions said not to include sunk costs in determining your answer..I am lost!

Microeconomics - Jamie, Wednesday, January 23, 2008 at 10:24pm
I think they should move forward with the project.

If you don't include costs already expended it is still cost effective and they should still show a profit

Answer this Question

Related Questions

Microeconomics - Two years ago a large corp. gegan construction on a new site. ...
time value of money - The ABC Computer Corporation is considering an increase in...
microeconomics - Explain how the following events would affect the demand for ...
finance - A company wants to build a new factory for increased capacity. Using ...
Finance - A company wants to build a new factory for increased capacity. Using ...
Finance - Question 1: You wish to start a project. Your initial investment is $...
History - How long ago did the first human culture, involving villages and a ...
ECONOMICS - Imagine that you manage a company that has invested $5 million in ...
Corporate Finance - A company wants to build a new factory for increased ...
ECONOMICS - Imagine that you manage a company that has invested $5 million in ...

For Further Reading

First Name:
School Subject:
Answer: