A company is considering establishing a plant. Land was purchased two years ago on which it intends to build its new plant. Should the cost of land be included as a relevant cost. In my answer I excluded it because I thought it was a sunk cost. However the answer included it as a relevant cost. Why ?
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Financial Management
13y ago#1Is the question asking you to appraise using DCF?
What will they do with the land if they do not build the new plant?
Without seeing the full question, I cannot say why they have not treated it as a sunk cost.
What will they do with the land if they do not build the new plant?
Without seeing the full question, I cannot say why they have not treated it as a sunk cost.
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