La Poutine Cheese Products Inc.is considering a project that requires an initial cash outlay of $290,000, made up of $235,000 for the purchase of new equipment, $13,000 for the installation costs, and $42,000 for additional inventory.In addition, the R&D associated with the project was $5,000 and its opportunity costs are $28,000.What is the capital cost associated with the investment opportunity?

Question

Quizplus · Accepted Answer

The capital cost associated with the investment opportunity would be the sum of all the initial cash outlays, including the purchase of new equipment, installation costs, additional inventory, R&D costs, and opportunity costs. Thus, the capital cost would be:

$235,000 + $13,000 + $42,000 + $5,000 + $28,000 = $323,000

Therefore, the best choice is B, which is the closest to the capital cost of $323,000.