A company decides to close down its plastics division. It has on hand 20 tonnes of styrene monomer, a raw material that has a market price of $700 per tonne, which had been originally purchased at $650 per tonne. Given that the company has no use for the styrene monomer, and that it would cost the company $5000 to store it, what is the value of the 20 tonnes of styrene monomer to the company?

Question

Quizplus · Accepted Answer

The value of the styrene monomer is its market price minus storage costs. The market value is 20 tonnes * $700 = $14,000. Since the company has no use for it, the value is $14,000.

A Company Decides to Close Down Its Plastics Division